Correlation Between Nathans Famous and Joint Stock

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

By analyzing existing cross correlation between Nathans Famous and Joint Stock, you can compare the effects of market volatilities on Nathans Famous and Joint Stock 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 Nathans Famous with a short position of Joint Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nathans Famous and Joint Stock.

Diversification Opportunities for Nathans Famous and Joint Stock

0.77

Correlation Coefficient

Nathans Famous  Joint Stock

Poor diversification

The 3 months correlation between Nathans and Joint is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Nathans Famous and Joint Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joint Stock and Nathans Famous 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 Nathans Famous are associated (or correlated) with Joint Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joint Stock has no effect on the direction of Nathans Famous i.e., Nathans Famous and Joint Stock go up and down completely randomly.

Pair Corralation between Nathans Famous and Joint Stock

Given the investment horizon of 90 days Nathans Famous is expected to generate 0.69 times more return on investment than Joint Stock. However, Nathans Famous is 1.45 times less risky than Joint Stock. It trades about 0.04 of its potential returns per unit of risk. Joint Stock is currently generating about 0.02 per unit of risk. If you would invest  6,914  in Nathans Famous on October 9, 2024 and sell it today you would earn a total of  895.00  from holding Nathans Famous or generate 12.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.19%
Values	Daily Returns

Nathans Famous  vs.  Joint Stock

Nathans Famous

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nathans Famous has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Nathans Famous is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Joint Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Joint Stock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Joint Stock is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Nathans Famous and Joint Stock

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

The idea behind Nathans Famous and Joint Stock 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.