Correlation Between HelloFresh and El Pollo

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

By analyzing existing cross correlation between HelloFresh SE and El Pollo Loco, you can compare the effects of market volatilities on HelloFresh and El Pollo 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 HelloFresh with a short position of El Pollo. Check out your portfolio center. Please also check ongoing floating volatility patterns of HelloFresh and El Pollo.

Diversification Opportunities for HelloFresh and El Pollo

-0.54

Correlation Coefficient

HelloFresh  El Pollo

Excellent diversification

The 3 months correlation between HelloFresh and LOCO is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding HelloFresh SE and El Pollo Loco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Pollo Loco and HelloFresh 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 HelloFresh SE are associated (or correlated) with El Pollo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Pollo Loco has no effect on the direction of HelloFresh i.e., HelloFresh and El Pollo go up and down completely randomly.

Pair Corralation between HelloFresh and El Pollo

Assuming the 90 days horizon HelloFresh SE is expected to under-perform the El Pollo. In addition to that, HelloFresh is 2.43 times more volatile than El Pollo Loco. It trades about 0.0 of its total potential returns per unit of risk. El Pollo Loco is currently generating about 0.01 per unit of volatility. If you would invest  1,180  in El Pollo Loco on October 21, 2024 and sell it today you would lose (35.00) from holding El Pollo Loco or give up 2.97% of portfolio value over 90 days.

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

HelloFresh SE  vs.  El Pollo Loco

HelloFresh SE

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HelloFresh SE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, HelloFresh reported solid returns over the last few months and may actually be approaching a breakup point.

El Pollo Loco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days El Pollo Loco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with HelloFresh and El Pollo

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

The idea behind HelloFresh SE and El Pollo Loco 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.