Correlation Between Potbelly and AW Revenue

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

By analyzing existing cross correlation between Potbelly Co and AW Revenue Royalties, you can compare the effects of market volatilities on Potbelly and AW Revenue 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 Potbelly with a short position of AW Revenue. Check out your portfolio center. Please also check ongoing floating volatility patterns of Potbelly and AW Revenue.

Diversification Opportunities for Potbelly and AW Revenue

0.0

Correlation Coefficient

Potbelly  AW Revenue

Pay attention - limited upside

The 3 months correlation between Potbelly and AWRRF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Potbelly Co and AW Revenue Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AW Revenue Royalties and Potbelly 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 Potbelly Co are associated (or correlated) with AW Revenue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AW Revenue Royalties has no effect on the direction of Potbelly i.e., Potbelly and AW Revenue go up and down completely randomly.

Pair Corralation between Potbelly and AW Revenue

Given the investment horizon of 90 days Potbelly Co is expected to generate 0.69 times more return on investment than AW Revenue. However, Potbelly Co is 1.44 times less risky than AW Revenue. It trades about 0.03 of its potential returns per unit of risk. AW Revenue Royalties is currently generating about 0.02 per unit of risk. If you would invest  786.00  in Potbelly Co on October 23, 2024 and sell it today you would earn a total of  263.00  from holding Potbelly Co or generate 33.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	58.7%
Values	Daily Returns

Potbelly Co  vs.  AW Revenue Royalties

Potbelly

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Potbelly Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Potbelly sustained solid returns over the last few months and may actually be approaching a breakup point.

AW Revenue Royalties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AW Revenue Royalties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AW Revenue is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Potbelly and AW Revenue

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

The idea behind Potbelly Co and AW Revenue Royalties 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.