Correlation Between Red Robin and Alsea SAB

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

By analyzing existing cross correlation between Red Robin Gourmet and Alsea SAB de, you can compare the effects of market volatilities on Red Robin and Alsea SAB 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 Red Robin with a short position of Alsea SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Robin and Alsea SAB.

Diversification Opportunities for Red Robin and Alsea SAB

0.22

Correlation Coefficient

Red Robin  Alsea SAB

Modest diversification

The 3 months correlation between Red and Alsea is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Red Robin Gourmet and Alsea SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alsea SAB de and Red Robin 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 Red Robin Gourmet are associated (or correlated) with Alsea SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alsea SAB de has no effect on the direction of Red Robin i.e., Red Robin and Alsea SAB go up and down completely randomly.

Pair Corralation between Red Robin and Alsea SAB

Given the investment horizon of 90 days Red Robin Gourmet is expected to generate 1.14 times more return on investment than Alsea SAB. However, Red Robin is 1.14 times more volatile than Alsea SAB de. It trades about 0.03 of its potential returns per unit of risk. Alsea SAB de is currently generating about -0.22 per unit of risk. If you would invest  551.00  in Red Robin Gourmet on October 23, 2024 and sell it today you would earn a total of  5.00  from holding Red Robin Gourmet or generate 0.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Red Robin Gourmet  vs.  Alsea SAB de

Red Robin Gourmet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Red Robin Gourmet has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Red Robin is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Alsea SAB de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alsea SAB de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Red Robin and Alsea SAB

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

The idea behind Red Robin Gourmet and Alsea SAB de 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.