Correlation Between Restaurant Brands and A W

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

By analyzing existing cross correlation between Restaurant Brands International and A W FOOD, you can compare the effects of market volatilities on Restaurant Brands and A W 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 Restaurant Brands with a short position of A W. Check out your portfolio center. Please also check ongoing floating volatility patterns of Restaurant Brands and A W.

Diversification Opportunities for Restaurant Brands and A W

0.07

Correlation Coefficient

Restaurant Brands  A W

Significant diversification

The 3 months correlation between Restaurant and A W is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Restaurant Brands Internationa and A W FOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A W FOOD and Restaurant Brands 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 Restaurant Brands International are associated (or correlated) with A W. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A W FOOD has no effect on the direction of Restaurant Brands i.e., Restaurant Brands and A W go up and down completely randomly.

Pair Corralation between Restaurant Brands and A W

Assuming the 90 days trading horizon Restaurant Brands is expected to generate 5.4 times less return on investment than A W. But when comparing it to its historical volatility, Restaurant Brands International is 1.18 times less risky than A W. It trades about 0.05 of its potential returns per unit of risk. A W FOOD is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  3,208  in A W FOOD on May 4, 2025 and sell it today you would earn a total of  705.00  from holding A W FOOD or generate 21.98% return on investment over 90 days.

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

Restaurant Brands Internationa  vs.  A W FOOD

Restaurant Brands

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Restaurant Brands International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Restaurant Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

A W FOOD

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in A W FOOD are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, A W displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Restaurant Brands and A W

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

The idea behind Restaurant Brands International and A W FOOD 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.