Correlation Between Ark Restaurants and Potbelly

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

By analyzing existing cross correlation between Ark Restaurants Corp and Potbelly Co, you can compare the effects of market volatilities on Ark Restaurants and Potbelly 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 Ark Restaurants with a short position of Potbelly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ark Restaurants and Potbelly.

Diversification Opportunities for Ark Restaurants and Potbelly

-0.11

Correlation Coefficient

Ark Restaurants  Potbelly

Good diversification

The 3 months correlation between Ark and Potbelly is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ark Restaurants Corp and Potbelly Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Potbelly and Ark Restaurants 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 Ark Restaurants Corp are associated (or correlated) with Potbelly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Potbelly has no effect on the direction of Ark Restaurants i.e., Ark Restaurants and Potbelly go up and down completely randomly.

Pair Corralation between Ark Restaurants and Potbelly

Given the investment horizon of 90 days Ark Restaurants Corp is expected to under-perform the Potbelly. In addition to that, Ark Restaurants is 1.37 times more volatile than Potbelly Co. It trades about -0.03 of its total potential returns per unit of risk. Potbelly Co is currently generating about 0.06 per unit of volatility. If you would invest  822.00  in Potbelly Co on September 20, 2024 and sell it today you would earn a total of  81.00  from holding Potbelly Co or generate 9.85% return on investment over 90 days.

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

Ark Restaurants Corp  vs.  Potbelly Co

Ark Restaurants Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ark Restaurants Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's forward-looking signals remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Potbelly

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Potbelly Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Potbelly sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ark Restaurants and Potbelly

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

The idea behind Ark Restaurants Corp and Potbelly Co 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.