Correlation Between One Group and Potbelly

Can any of the company-specific risk be diversified away by investing in both One Group and Potbelly 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 Potbelly 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 Potbelly Co, you can compare the effects of market volatilities on One Group and Potbelly 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 Potbelly. Check out your portfolio center. Please also check ongoing floating volatility patterns of One Group and Potbelly.

Diversification Opportunities for One Group and Potbelly

0.79

Correlation Coefficient

One Group  Potbelly

Poor diversification

The 3 months correlation between One and Potbelly is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding One Group Hospitality and Potbelly Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Potbelly 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 Potbelly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Potbelly has no effect on the direction of One Group i.e., One Group and Potbelly go up and down completely randomly.

Pair Corralation between One Group and Potbelly

Given the investment horizon of 90 days One Group is expected to generate 1.02 times less return on investment than Potbelly. But when comparing it to its historical volatility, One Group Hospitality is 1.08 times less risky than Potbelly. It trades about 0.03 of its potential returns per unit of risk. Potbelly Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  925.00  in Potbelly Co on December 28, 2024 and sell it today you would earn a total of  9.00  from holding Potbelly Co or generate 0.97% return on investment over 90 days.

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

One Group Hospitality  vs.  Potbelly Co

One Group Hospitality

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in One Group Hospitality are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking signals, One Group is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Potbelly

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Potbelly Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Potbelly may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with One Group and Potbelly

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

The idea behind One Group Hospitality and Potbelly Co 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.