Correlation Between Bloomin Brands and Nathans Famous

Can any of the company-specific risk be diversified away by investing in both Bloomin Brands and Nathans Famous 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 Bloomin Brands and Nathans Famous into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Bloomin Brands and Nathans Famous

-0.36

Correlation Coefficient

Bloomin Brands  Nathans Famous

Very good diversification

The 3 months correlation between Bloomin and Nathans is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bloomin Brands and Nathans Famous in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nathans Famous and Bloomin Brands 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 Bloomin Brands are associated (or correlated) with Nathans Famous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nathans Famous has no effect on the direction of Bloomin Brands i.e., Bloomin Brands and Nathans Famous go up and down completely randomly.

Pair Corralation between Bloomin Brands and Nathans Famous

Given the investment horizon of 90 days Bloomin Brands is expected to under-perform the Nathans Famous. In addition to that, Bloomin Brands is 1.49 times more volatile than Nathans Famous. It trades about -0.02 of its total potential returns per unit of risk. Nathans Famous is currently generating about 0.0 per unit of volatility. If you would invest  8,237  in Nathans Famous on September 21, 2024 and sell it today you would lose (53.00) from holding Nathans Famous or give up 0.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bloomin Brands  vs.  Nathans Famous

Bloomin Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bloomin Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary 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.

Nathans Famous

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nathans Famous are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Nathans Famous is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Bloomin Brands and Nathans Famous

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

The idea behind Bloomin Brands and Nathans Famous 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.