Correlation Between Burgerfi International and Canoo Holdings

Can any of the company-specific risk be diversified away by investing in both Burgerfi International and Canoo Holdings 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 Burgerfi International and Canoo Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Burgerfi International and Canoo Holdings, you can compare the effects of market volatilities on Burgerfi International and Canoo Holdings 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 Burgerfi International with a short position of Canoo Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burgerfi International and Canoo Holdings.

Diversification Opportunities for Burgerfi International and Canoo Holdings

-0.04

Correlation Coefficient

Burgerfi International  Canoo Holdings

Good diversification

The 3 months correlation between Burgerfi and Canoo is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Burgerfi International and Canoo Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canoo Holdings and Burgerfi International 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 Burgerfi International are associated (or correlated) with Canoo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canoo Holdings has no effect on the direction of Burgerfi International i.e., Burgerfi International and Canoo Holdings go up and down completely randomly.

Pair Corralation between Burgerfi International and Canoo Holdings

If you would invest  2.19  in Canoo Holdings on September 27, 2024 and sell it today you would earn a total of  0.13  from holding Canoo Holdings or generate 5.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

Burgerfi International  vs.  Canoo Holdings

Burgerfi International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Burgerfi International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Burgerfi International is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Canoo Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canoo Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Canoo Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Burgerfi International and Canoo Holdings

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

The idea behind Burgerfi International and Canoo Holdings 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.