Correlation Between Papa Johns and Gambling

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

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

Diversification Opportunities for Papa Johns and Gambling

-0.05

Correlation Coefficient

Papa Johns  Gambling

Good diversification

The 3 months correlation between Papa and Gambling is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Papa Johns International and Gambling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gambling Group and Papa Johns 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 Papa Johns International are associated (or correlated) with Gambling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gambling Group has no effect on the direction of Papa Johns i.e., Papa Johns and Gambling go up and down completely randomly.

Pair Corralation between Papa Johns and Gambling

Given the investment horizon of 90 days Papa Johns International is expected to generate 1.34 times more return on investment than Gambling. However, Papa Johns is 1.34 times more volatile than Gambling Group. It trades about 0.02 of its potential returns per unit of risk. Gambling Group is currently generating about -0.05 per unit of risk. If you would invest  3,961  in Papa Johns International on December 28, 2024 and sell it today you would earn a total of  23.00  from holding Papa Johns International or generate 0.58% return on investment over 90 days.

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

Papa Johns International  vs.  Gambling Group

Papa Johns International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Papa Johns International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Papa Johns is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Gambling Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gambling Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Papa Johns and Gambling

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

The idea behind Papa Johns International and Gambling 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.