Correlation Between El Pollo and One Group

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

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

Diversification Opportunities for El Pollo and One Group

0.56

Correlation Coefficient

El Pollo  One Group

Very weak diversification

The 3 months correlation between LOCO and One is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding El Pollo Loco and One Group Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Group Hospitality and El Pollo 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 El Pollo Loco are associated (or correlated) with One Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Group Hospitality has no effect on the direction of El Pollo i.e., El Pollo and One Group go up and down completely randomly.

Pair Corralation between El Pollo and One Group

Given the investment horizon of 90 days El Pollo Loco is expected to under-perform the One Group. But the stock apears to be less risky and, when comparing its historical volatility, El Pollo Loco is 2.13 times less risky than One Group. The stock trades about -0.12 of its potential returns per unit of risk. The One Group Hospitality is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  286.00  in One Group Hospitality on December 23, 2024 and sell it today you would lose (6.00) from holding One Group Hospitality or give up 2.1% of portfolio value over 90 days.

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

El Pollo Loco  vs.  One Group Hospitality

El Pollo Loco

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

One Group Hospitality

Risk-Adjusted Performance

Very Weak

Over the last 90 days One Group Hospitality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, One Group 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 El Pollo and One Group

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

The idea behind El Pollo Loco and One Group Hospitality 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.

Check out your portfolio center.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.