Correlation Between Big Buck and Restaurant Brands
Can any of the company-specific risk be diversified away by investing in both Big Buck and Restaurant 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 Big Buck and Restaurant Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Buck Brewery and Restaurant Brands International, you can compare the effects of market volatilities on Big Buck and Restaurant 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 Big Buck with a short position of Restaurant Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Buck and Restaurant Brands.
Diversification Opportunities for Big Buck and Restaurant Brands
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Big and Restaurant is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Big Buck Brewery and Restaurant Brands Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Restaurant Brands and Big Buck 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 Big Buck Brewery are associated (or correlated) with Restaurant Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Restaurant Brands has no effect on the direction of Big Buck i.e., Big Buck and Restaurant Brands go up and down completely randomly.
Pair Corralation between Big Buck and Restaurant Brands
Assuming the 90 days horizon Big Buck Brewery is expected to under-perform the Restaurant Brands. In addition to that, Big Buck is 5.23 times more volatile than Restaurant Brands International. It trades about -0.08 of its total potential returns per unit of risk. Restaurant Brands International is currently generating about 0.07 per unit of volatility. If you would invest 4,890 in Restaurant Brands International on January 25, 2024 and sell it today you would earn a total of 2,472 from holding Restaurant Brands International or generate 50.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 33.63% |
| Values | Daily Returns |
Big Buck Brewery vs. Restaurant Brands Internationa
Performance |
| Timeline |
| Big Buck Brewery |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Restaurant Brands |
Big Buck and Restaurant Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Buck and Restaurant Brands
The main advantage of trading using opposite Big Buck and Restaurant Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Buck position performs unexpectedly, Restaurant 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 Restaurant Brands will offset losses from the drop in Restaurant Brands' long position.| Big Buck vs. Maiden Holdings | Big Buck vs. Tencent Music Entertainment | Big Buck vs. Employers Holdings | Big Buck vs. Sun Life Financial |
| Restaurant Brands vs. Yum Brands | Restaurant Brands vs. Papa Johns International | Restaurant Brands vs. Jack In The | Restaurant Brands vs. Dominos Pizza |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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