Correlation Between Noodles and Container Store

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

By analyzing existing cross correlation between Noodles Company and Container Store Group, you can compare the effects of market volatilities on Noodles and Container Store 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 Noodles with a short position of Container Store. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noodles and Container Store.

Diversification Opportunities for Noodles and Container Store

0.8

Correlation Coefficient

Noodles  Container Store

Very poor diversification

The 3 months correlation between Noodles and Container is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Noodles Company and Container Store Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Container Store Group and Noodles 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 Noodles Company are associated (or correlated) with Container Store. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Container Store Group has no effect on the direction of Noodles i.e., Noodles and Container Store go up and down completely randomly.

Pair Corralation between Noodles and Container Store

Given the investment horizon of 90 days Noodles Company is expected to under-perform the Container Store. But the stock apears to be less risky and, when comparing its historical volatility, Noodles Company is 2.3 times less risky than Container Store. The stock trades about -0.11 of its potential returns per unit of risk. The Container Store Group is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,940  in Container Store Group on October 3, 2024 and sell it today you would lose (2,675) from holding Container Store Group or give up 90.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.76%
Values	Daily Returns

Noodles Company  vs.  Container Store Group

Noodles Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Noodles Company 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 essential indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Container Store Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Container Store Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Noodles and Container Store

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

The idea behind Noodles Company and Container Store 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.