Correlation Between Bagger Daves and AW Revenue

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

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

Diversification Opportunities for Bagger Daves and AW Revenue

0.2

Correlation Coefficient

Bagger Daves  AW Revenue

Modest diversification

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

Pair Corralation between Bagger Daves and AW Revenue

Given the investment horizon of 90 days Bagger Daves Burger is expected to generate 8.49 times more return on investment than AW Revenue. However, Bagger Daves is 8.49 times more volatile than AW Revenue Royalties. It trades about 0.11 of its potential returns per unit of risk. AW Revenue Royalties is currently generating about 0.28 per unit of risk. 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

Bagger Daves Burger  vs.  AW Revenue Royalties

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.

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.

Pair Trading with Bagger Daves and AW Revenue

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

The idea behind Bagger Daves Burger and AW Revenue Royalties 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 CEOs Directory module to screen CEOs from public companies around the world.