Correlation Between WW International and Nathans Famous

Can any of the company-specific risk be diversified away by investing in both WW International 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 WW International and Nathans Famous into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for WW International and Nathans Famous

-0.84

Correlation Coefficient

WW International  Nathans Famous

Pay attention - limited upside

The 3 months correlation between WW International and Nathans is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding WW International and Nathans Famous in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nathans Famous and WW International 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 WW International 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 WW International i.e., WW International and Nathans Famous go up and down completely randomly.

Pair Corralation between WW International and Nathans Famous

Allowing for the 90-day total investment horizon WW International is expected to under-perform the Nathans Famous. In addition to that, WW International is 3.02 times more volatile than Nathans Famous. It trades about -0.23 of its total potential returns per unit of risk. Nathans Famous is currently generating about 0.15 per unit of volatility. If you would invest  7,816  in Nathans Famous on January 4, 2025 and sell it today you would earn a total of  1,769  from holding Nathans Famous or generate 22.63% return on investment over 90 days.

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

WW International  vs.  Nathans Famous

WW International

Risk-Adjusted Performance

Very Weak

Over the last 90 days WW International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in May 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Nathans Famous

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nathans Famous are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Nathans Famous demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WW International and Nathans Famous

The main advantage of trading using opposite WW International and Nathans Famous positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WW International 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.

The idea behind WW International and Nathans Famous 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.