Correlation Between FAT Brands and Medalist Diversified

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

By analyzing existing cross correlation between FAT Brands and Medalist Diversified Reit, you can compare the effects of market volatilities on FAT Brands and Medalist Diversified 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 Medalist Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAT Brands and Medalist Diversified.

Diversification Opportunities for FAT Brands and Medalist Diversified

0.39

Correlation Coefficient

FAT Brands  Medalist Diversified

Weak diversification

The 3 months correlation between FAT and Medalist is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding FAT Brands and Medalist Diversified Reit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medalist Diversified Reit 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 Medalist Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medalist Diversified Reit has no effect on the direction of FAT Brands i.e., FAT Brands and Medalist Diversified go up and down completely randomly.

Pair Corralation between FAT Brands and Medalist Diversified

Assuming the 90 days horizon FAT Brands is expected to under-perform the Medalist Diversified. But the preferred stock apears to be less risky and, when comparing its historical volatility, FAT Brands is 1.28 times less risky than Medalist Diversified. The preferred stock trades about -0.09 of its potential returns per unit of risk. The Medalist Diversified Reit is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,330  in Medalist Diversified Reit on October 13, 2024 and sell it today you would earn a total of  181.00  from holding Medalist Diversified Reit or generate 7.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

FAT Brands  vs.  Medalist Diversified Reit

FAT Brands

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FAT Brands are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, FAT Brands may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Medalist Diversified Reit

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Medalist Diversified Reit are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Medalist Diversified is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with FAT Brands and Medalist Diversified

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

The idea behind FAT Brands and Medalist Diversified Reit 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.