Correlation Between Presidio Property and FAT Brands

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

By analyzing existing cross correlation between Presidio Property Trust and FAT Brands, you can compare the effects of market volatilities on Presidio Property and FAT Brands 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 Presidio Property with a short position of FAT Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Presidio Property and FAT Brands.

Diversification Opportunities for Presidio Property and FAT Brands

0.43

Correlation Coefficient

Presidio Property  FAT Brands

Very weak diversification

The 3 months correlation between Presidio and FAT is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Presidio Property Trust and FAT Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAT Brands and Presidio Property 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 Presidio Property Trust are associated (or correlated) with FAT Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAT Brands has no effect on the direction of Presidio Property i.e., Presidio Property and FAT Brands go up and down completely randomly.

Pair Corralation between Presidio Property and FAT Brands

Assuming the 90 days horizon Presidio Property Trust is expected to under-perform the FAT Brands. In addition to that, Presidio Property is 1.35 times more volatile than FAT Brands. It trades about -0.17 of its total potential returns per unit of risk. FAT Brands is currently generating about 0.3 per unit of volatility. If you would invest  941.00  in FAT Brands on September 1, 2024 and sell it today you would earn a total of  70.00  from holding FAT Brands or generate 7.44% return on investment over 90 days.

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

Presidio Property Trust  vs.  FAT Brands

Presidio Property Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Presidio Property Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Preferred Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

FAT Brands

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FAT Brands are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, FAT Brands is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Presidio Property and FAT Brands

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

The idea behind Presidio Property Trust and FAT Brands 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.