Correlation Between Good Times and Bt Brands
Can any of the company-specific risk be diversified away by investing in both Good Times and Bt Brands 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 Bt Brands 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 Bt Brands, you can compare the effects of market volatilities on Good Times and Bt Brands 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 Bt Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Good Times and Bt Brands.
Diversification Opportunities for Good Times and Bt Brands
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Good and BTBD is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Good Times Restaurants and Bt Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bt Brands 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 Bt Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bt Brands has no effect on the direction of Good Times i.e., Good Times and Bt Brands go up and down completely randomly.
Pair Corralation between Good Times and Bt Brands
Given the investment horizon of 90 days Good Times Restaurants is expected to under-perform the Bt Brands. But the stock apears to be less risky and, when comparing its historical volatility, Good Times Restaurants is 1.67 times less risky than Bt Brands. The stock trades about -0.05 of its potential returns per unit of risk. The Bt Brands is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 163.00 in Bt Brands on September 15, 2024 and sell it today you would lose (3.00) from holding Bt Brands or give up 1.84% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Good Times Restaurants vs. Bt Brands
Performance |
Timeline |
Good Times Restaurants |
Bt Brands |
Good Times and Bt Brands Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Good Times and Bt Brands
The main advantage of trading using opposite Good Times and Bt Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Good Times position performs unexpectedly, Bt Brands 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 Bt Brands will offset losses from the drop in Bt Brands' long position.Good Times vs. Nathans Famous | Good Times vs. FAT Brands | Good Times vs. El Pollo Loco | Good Times vs. Ark Restaurants Corp |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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