Correlation Between Good Times and Carrols Restaurant

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

By analyzing existing cross correlation between Good Times Restaurants and Carrols Restaurant Group, you can compare the effects of market volatilities on Good Times and Carrols Restaurant 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 Good Times with a short position of Carrols Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Good Times and Carrols Restaurant.

Diversification Opportunities for Good Times and Carrols Restaurant

-0.27

Correlation Coefficient

Good Times  Carrols Restaurant

Very good diversification

The 3 months correlation between Good and Carrols is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Good Times Restaurants and Carrols Restaurant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carrols Restaurant and Good Times 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 Good Times Restaurants are associated (or correlated) with Carrols Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carrols Restaurant has no effect on the direction of Good Times i.e., Good Times and Carrols Restaurant go up and down completely randomly.

Pair Corralation between Good Times and Carrols Restaurant

If you would invest  255.00  in Good Times Restaurants on September 20, 2024 and sell it today you would lose (12.00) from holding Good Times Restaurants or give up 4.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.4%
Values	Daily Returns

Good Times Restaurants  vs.  Carrols Restaurant Group

Good Times Restaurants

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Good Times Restaurants 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 forward 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.

Carrols Restaurant

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carrols Restaurant Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Carrols Restaurant is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Good Times and Carrols Restaurant

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

The idea behind Good Times Restaurants and Carrols Restaurant Group 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.