Correlation Between Carrols Restaurant and Nathans Famous
Can any of the company-specific risk be diversified away by investing in both Carrols Restaurant and Nathans Famous 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 Nathans Famous 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 Nathans Famous, you can compare the effects of market volatilities on Carrols Restaurant and Nathans Famous 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 Nathans Famous. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carrols Restaurant and Nathans Famous.
Diversification Opportunities for Carrols Restaurant and Nathans Famous
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carrols and Nathans is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Carrols Restaurant Group and Nathans Famous in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nathans Famous 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 Nathans Famous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nathans Famous has no effect on the direction of Carrols Restaurant i.e., Carrols Restaurant and Nathans Famous go up and down completely randomly.
Pair Corralation between Carrols Restaurant and Nathans Famous
If you would invest 7,851 in Nathans Famous on September 24, 2024 and sell it today you would earn a total of 127.00 from holding Nathans Famous or generate 1.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 1.54% |
Values | Daily Returns |
Carrols Restaurant Group vs. Nathans Famous
Performance |
Timeline |
Carrols Restaurant |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Nathans Famous |
Carrols Restaurant and Nathans Famous Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Carrols Restaurant and Nathans Famous
The main advantage of trading using opposite Carrols Restaurant and Nathans Famous positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carrols Restaurant position performs unexpectedly, Nathans Famous 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 Nathans Famous will offset losses from the drop in Nathans Famous' long position.Carrols Restaurant vs. FAT Brands | Carrols Restaurant vs. Potbelly Co | Carrols Restaurant vs. BJs Restaurants | Carrols Restaurant vs. One Group Hospitality |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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