Correlation Between Flanigans Enterprises and Portillos

Can any of the company-specific risk be diversified away by investing in both Flanigans Enterprises and Portillos at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Flanigans Enterprises and Portillos into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Flanigans Enterprises and Portillos, you can compare the effects of market volatilities on Flanigans Enterprises and Portillos and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Flanigans Enterprises with a short position of Portillos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flanigans Enterprises and Portillos.

Diversification Opportunities for Flanigans Enterprises and Portillos

0.64

Correlation Coefficient

Flanigans Enterprises  Portillos

Poor diversification

The 3 months correlation between Flanigans and Portillos is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Flanigans Enterprises and Portillos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portillos and Flanigans Enterprises is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Flanigans Enterprises are associated (or correlated) with Portillos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portillos has no effect on the direction of Flanigans Enterprises i.e., Flanigans Enterprises and Portillos go up and down completely randomly.

Pair Corralation between Flanigans Enterprises and Portillos

Considering the 90-day investment horizon Flanigans Enterprises is expected to generate 0.76 times more return on investment than Portillos. However, Flanigans Enterprises is 1.32 times less risky than Portillos. It trades about -0.04 of its potential returns per unit of risk. Portillos is currently generating about -0.12 per unit of risk. If you would invest  2,591  in Flanigans Enterprises on September 12, 2024 and sell it today you would lose (125.00) from holding Flanigans Enterprises or give up 4.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	87.5%
Values	Daily Returns

Flanigans Enterprises  vs.  Portillos

Flanigans Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flanigans Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Flanigans Enterprises is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Portillos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Portillos has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Flanigans Enterprises and Portillos

The main advantage of trading using opposite Flanigans Enterprises and Portillos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flanigans Enterprises position performs unexpectedly, Portillos can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Portillos will offset losses from the drop in Portillos' long position.

The idea behind Flanigans Enterprises and Portillos pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.