Correlation Between Pinetree Capital and Franchise

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

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

Diversification Opportunities for Pinetree Capital and Franchise

-0.04

Correlation Coefficient

Pinetree Capital  Franchise

Good diversification

The 3 months correlation between Pinetree and Franchise is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Pinetree Capital and Franchise Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franchise Group and Pinetree Capital 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 Pinetree Capital are associated (or correlated) with Franchise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franchise Group has no effect on the direction of Pinetree Capital i.e., Pinetree Capital and Franchise go up and down completely randomly.

Pair Corralation between Pinetree Capital and Franchise

If you would invest  541.00  in Pinetree Capital on September 28, 2024 and sell it today you would earn a total of  149.00  from holding Pinetree Capital or generate 27.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Pinetree Capital  vs.  Franchise Group

Pinetree Capital

Risk-Adjusted Performance

8 of 100

OK

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

Franchise Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pinetree Capital and Franchise

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

The idea behind Pinetree Capital and Franchise 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 Transaction History module to view history of all your transactions and understand their impact on performance.