Correlation Between Chuys Holdings and Noodles

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

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

Diversification Opportunities for Chuys Holdings and Noodles

-0.31

Correlation Coefficient

Chuys Holdings  Noodles

Very good diversification

The 3 months correlation between Chuys and Noodles is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Chuys Holdings and Noodles Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noodles Company and Chuys Holdings 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 Chuys Holdings are associated (or correlated) with Noodles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noodles Company has no effect on the direction of Chuys Holdings i.e., Chuys Holdings and Noodles go up and down completely randomly.

Pair Corralation between Chuys Holdings and Noodles

If you would invest  69.00  in Noodles Company on September 20, 2024 and sell it today you would lose (1.40) from holding Noodles Company or give up 2.03% of portfolio value over 90 days.

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

Chuys Holdings  vs.  Noodles Company

Chuys Holdings

Risk-Adjusted Performance

0 of 100

Very Strong

Over the last 90 days Chuys Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Chuys Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Noodles Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Noodles Company 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 comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Chuys Holdings and Noodles

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

The idea behind Chuys Holdings and Noodles Company 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.