Correlation Between Carrols Restaurant and Flanigans Enterprises
Can any of the company-specific risk be diversified away by investing in both Carrols Restaurant and Flanigans Enterprises 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 Carrols Restaurant and Flanigans Enterprises into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carrols Restaurant Group and Flanigans Enterprises, you can compare the effects of market volatilities on Carrols Restaurant and Flanigans Enterprises 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 Carrols Restaurant with a short position of Flanigans Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carrols Restaurant and Flanigans Enterprises.
Diversification Opportunities for Carrols Restaurant and Flanigans Enterprises
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Carrols and Flanigans is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Carrols Restaurant Group and Flanigans Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flanigans Enterprises and Carrols Restaurant 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 Carrols Restaurant Group are associated (or correlated) with Flanigans Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flanigans Enterprises has no effect on the direction of Carrols Restaurant i.e., Carrols Restaurant and Flanigans Enterprises go up and down completely randomly.
Pair Corralation between Carrols Restaurant and Flanigans Enterprises
Given the investment horizon of 90 days Carrols Restaurant is expected to generate 1.7 times less return on investment than Flanigans Enterprises. But when comparing it to its historical volatility, Carrols Restaurant Group is 9.09 times less risky than Flanigans Enterprises. It trades about 0.22 of its potential returns per unit of risk. Flanigans Enterprises is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,505 in Flanigans Enterprises on September 20, 2024 and sell it today you would lose (80.00) from holding Flanigans Enterprises or give up 3.19% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 29.6% |
Values | Daily Returns |
Carrols Restaurant Group vs. Flanigans Enterprises
Performance |
Timeline |
Carrols Restaurant |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Flanigans Enterprises |
Carrols Restaurant and Flanigans Enterprises Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Carrols Restaurant and Flanigans Enterprises
The main advantage of trading using opposite Carrols Restaurant and Flanigans Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carrols Restaurant position performs unexpectedly, Flanigans Enterprises 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 Flanigans Enterprises will offset losses from the drop in Flanigans Enterprises' long position.Carrols Restaurant vs. FAT Brands | Carrols Restaurant vs. Potbelly Co | Carrols Restaurant vs. BJs Restaurants | Carrols Restaurant vs. One Group Hospitality |
Flanigans Enterprises vs. FAT Brands | Flanigans Enterprises vs. Potbelly Co | Flanigans Enterprises vs. BJs Restaurants | Flanigans Enterprises vs. One Group Hospitality |
Check out your portfolio center.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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