Correlation Between FAT Brands and Fiesta Restaurant

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

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

Diversification Opportunities for FAT Brands and Fiesta Restaurant

-0.14

Correlation Coefficient

FAT Brands  Fiesta Restaurant

Good diversification

The 3 months correlation between FAT and Fiesta is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding FAT Brands and Fiesta Restaurant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiesta Restaurant and FAT 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 FAT Brands are associated (or correlated) with Fiesta Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiesta Restaurant has no effect on the direction of FAT Brands i.e., FAT Brands and Fiesta Restaurant go up and down completely randomly.

Pair Corralation between FAT Brands and Fiesta Restaurant

If you would invest  438.00  in FAT Brands on September 17, 2024 and sell it today you would earn a total of  3.00  from holding FAT Brands or generate 0.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

FAT Brands  vs.  Fiesta Restaurant Group

FAT Brands

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FAT Brands are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, FAT Brands may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fiesta Restaurant

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fiesta Restaurant Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Fiesta Restaurant is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with FAT Brands and Fiesta Restaurant

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

The idea behind FAT Brands and Fiesta Restaurant Group 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.