Correlation Between Bagger Daves and Red Robin

Can any of the company-specific risk be diversified away by investing in both Bagger Daves and Red Robin 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 Bagger Daves and Red Robin into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bagger Daves Burger and Red Robin Gourmet, you can compare the effects of market volatilities on Bagger Daves and Red Robin 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 Bagger Daves with a short position of Red Robin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bagger Daves and Red Robin.

Diversification Opportunities for Bagger Daves and Red Robin

0.33

Correlation Coefficient

Bagger Daves  Red Robin

Weak diversification

The 3 months correlation between Bagger and Red is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Bagger Daves Burger and Red Robin Gourmet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Robin Gourmet and Bagger Daves 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 Bagger Daves Burger are associated (or correlated) with Red Robin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Robin Gourmet has no effect on the direction of Bagger Daves i.e., Bagger Daves and Red Robin go up and down completely randomly.

Pair Corralation between Bagger Daves and Red Robin

Given the investment horizon of 90 days Bagger Daves Burger is expected to generate 1.43 times more return on investment than Red Robin. However, Bagger Daves is 1.43 times more volatile than Red Robin Gourmet. It trades about 0.15 of its potential returns per unit of risk. Red Robin Gourmet is currently generating about 0.03 per unit of risk. If you would invest  5.51  in Bagger Daves Burger on October 23, 2024 and sell it today you would earn a total of  0.67  from holding Bagger Daves Burger or generate 12.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.0%
Values	Daily Returns

Bagger Daves Burger  vs.  Red Robin Gourmet

Bagger Daves Burger

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bagger Daves Burger has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bagger Daves is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Red Robin Gourmet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Red Robin Gourmet has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Red Robin is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bagger Daves and Red Robin

The main advantage of trading using opposite Bagger Daves and Red Robin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bagger Daves position performs unexpectedly, Red Robin 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 Red Robin will offset losses from the drop in Red Robin's long position.

The idea behind Bagger Daves Burger and Red Robin Gourmet 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.

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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 CEOs Directory module to screen CEOs from public companies around the world.