Correlation Between Good Times and Flanigans Enterprises

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

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

Diversification Opportunities for Good Times and Flanigans Enterprises

0.26

Correlation Coefficient

Good Times  Flanigans Enterprises

Modest diversification

The 3 months correlation between Good and Flanigans is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Good Times Restaurants and Flanigans Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flanigans Enterprises and Good Times 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 Good Times Restaurants are associated (or correlated) with Flanigans Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flanigans Enterprises has no effect on the direction of Good Times i.e., Good Times and Flanigans Enterprises go up and down completely randomly.

Pair Corralation between Good Times and Flanigans Enterprises

Given the investment horizon of 90 days Good Times Restaurants is expected to under-perform the Flanigans Enterprises. In addition to that, Good Times is 1.28 times more volatile than Flanigans Enterprises. It trades about -0.03 of its total potential returns per unit of risk. Flanigans Enterprises is currently generating about -0.02 per unit of volatility. If you would invest  2,560  in Flanigans Enterprises on September 1, 2024 and sell it today you would lose (85.00) from holding Flanigans Enterprises or give up 3.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	85.71%
Values	Daily Returns

Good Times Restaurants  vs.  Flanigans Enterprises

Good Times Restaurants

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Good Times Restaurants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Good Times is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Flanigans Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flanigans Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Flanigans Enterprises is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Good Times and Flanigans Enterprises

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

The idea behind Good Times Restaurants and Flanigans Enterprises 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.