Correlation Between AW Revenue and Bagger Daves

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

By analyzing existing cross correlation between AW Revenue Royalties and Bagger Daves Burger, you can compare the effects of market volatilities on AW Revenue and Bagger Daves 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 AW Revenue with a short position of Bagger Daves. Check out your portfolio center. Please also check ongoing floating volatility patterns of AW Revenue and Bagger Daves.

Diversification Opportunities for AW Revenue and Bagger Daves

0.2

Correlation Coefficient

AW Revenue  Bagger Daves

Modest diversification

The 3 months correlation between AWRRF and Bagger is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding AW Revenue Royalties and Bagger Daves Burger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bagger Daves Burger and AW Revenue 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 AW Revenue Royalties are associated (or correlated) with Bagger Daves. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bagger Daves Burger has no effect on the direction of AW Revenue i.e., AW Revenue and Bagger Daves go up and down completely randomly.

Pair Corralation between AW Revenue and Bagger Daves

Assuming the 90 days horizon AW Revenue is expected to generate 3.27 times less return on investment than Bagger Daves. But when comparing it to its historical volatility, AW Revenue Royalties is 8.49 times less risky than Bagger Daves. It trades about 0.28 of its potential returns per unit of risk. Bagger Daves Burger is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  5.01  in Bagger Daves Burger on September 1, 2024 and sell it today you would earn a total of  1.99  from holding Bagger Daves Burger or generate 39.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	50.0%
Values	Daily Returns

AW Revenue Royalties  vs.  Bagger Daves Burger

AW Revenue Royalties

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days AW Revenue Royalties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly unsteady basic indicators, AW Revenue reported solid returns over the last few months and may actually be approaching a breakup point.

Bagger Daves Burger

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bagger Daves Burger are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Bagger Daves sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AW Revenue and Bagger Daves

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

The idea behind AW Revenue Royalties and Bagger Daves Burger 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.