Correlation Between FAT Brands and Jack In

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

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

Diversification Opportunities for FAT Brands and Jack In

-0.31

Correlation Coefficient

FAT Brands  Jack In

Very good diversification

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

Pair Corralation between FAT Brands and Jack In

Assuming the 90 days horizon FAT Brands is expected to under-perform the Jack In. But the preferred stock apears to be less risky and, when comparing its historical volatility, FAT Brands is 1.75 times less risky than Jack In. The preferred stock trades about -0.12 of its potential returns per unit of risk. The Jack In The is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  4,806  in Jack In The on September 29, 2024 and sell it today you would lose (753.00) from holding Jack In The or give up 15.67% of portfolio value over 90 days.

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

FAT Brands  vs.  Jack In The

FAT Brands

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FAT Brands are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, FAT Brands is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Jack In

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jack In The has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with FAT Brands and Jack In

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

The idea behind FAT Brands and Jack In The 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.