Correlation Between One Group and Noodles

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

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

Diversification Opportunities for One Group and Noodles

0.66

Correlation Coefficient

One Group  Noodles

Poor diversification

The 3 months correlation between One and Noodles is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding One Group Hospitality and Noodles Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noodles Company and One Group 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 One Group Hospitality are associated (or correlated) with Noodles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noodles Company has no effect on the direction of One Group i.e., One Group and Noodles go up and down completely randomly.

Pair Corralation between One Group and Noodles

Given the investment horizon of 90 days One Group Hospitality is expected to generate 0.75 times more return on investment than Noodles. However, One Group Hospitality is 1.34 times less risky than Noodles. It trades about -0.09 of its potential returns per unit of risk. Noodles Company is currently generating about -0.15 per unit of risk. If you would invest  357.00  in One Group Hospitality on September 20, 2024 and sell it today you would lose (82.00) from holding One Group Hospitality or give up 22.97% of portfolio value over 90 days.

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

One Group Hospitality  vs.  Noodles Company

One Group Hospitality

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days One Group Hospitality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Noodles Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Noodles Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with One Group and Noodles

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

The idea behind One Group Hospitality and Noodles Company 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.