Correlation Between Bt Brands and Nathans Famous

Can any of the company-specific risk be diversified away by investing in both Bt 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 Bt 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 Bt Brands and Nathans Famous, you can compare the effects of market volatilities on Bt 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 Bt Brands with a short position of Nathans Famous. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bt Brands and Nathans Famous.

Diversification Opportunities for Bt Brands and Nathans Famous

0.05

Correlation Coefficient

Bt Brands  Nathans Famous

Significant diversification

The 3 months correlation between BTBD and Nathans is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bt Brands and Nathans Famous in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nathans Famous and Bt 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 Bt 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 Bt Brands i.e., Bt Brands and Nathans Famous go up and down completely randomly.

Pair Corralation between Bt Brands and Nathans Famous

Given the investment horizon of 90 days Bt Brands is expected to generate 4.64 times more return on investment than Nathans Famous. However, Bt Brands is 4.64 times more volatile than Nathans Famous. It trades about 0.13 of its potential returns per unit of risk. Nathans Famous is currently generating about -0.04 per unit of risk. If you would invest  146.00  in Bt Brands on October 26, 2024 and sell it today you would earn a total of  18.00  from holding Bt Brands or generate 12.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Bt Brands  vs.  Nathans Famous

Bt Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bt Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Bt Brands is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Nathans Famous

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nathans Famous has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Bt Brands and Nathans Famous

The main advantage of trading using opposite Bt Brands and Nathans Famous positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bt 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 Bt 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..