Correlation Between Western Asset and Ark Restaurants

Can any of the company-specific risk be diversified away by investing in both Western Asset and Ark Restaurants 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 Western Asset and Ark Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Western Asset Investment and Ark Restaurants Corp, you can compare the effects of market volatilities on Western Asset and Ark Restaurants 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 Western Asset with a short position of Ark Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Ark Restaurants.

Diversification Opportunities for Western Asset and Ark Restaurants

0.3

Correlation Coefficient

Western Asset  Ark Restaurants

Weak diversification

The 3 months correlation between Western and Ark is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Investment and Ark Restaurants Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ark Restaurants Corp and Western Asset 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 Western Asset Investment are associated (or correlated) with Ark Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ark Restaurants Corp has no effect on the direction of Western Asset i.e., Western Asset and Ark Restaurants go up and down completely randomly.

Pair Corralation between Western Asset and Ark Restaurants

Considering the 90-day investment horizon Western Asset Investment is expected to generate 0.18 times more return on investment than Ark Restaurants. However, Western Asset Investment is 5.44 times less risky than Ark Restaurants. It trades about 0.05 of its potential returns per unit of risk. Ark Restaurants Corp is currently generating about 0.0 per unit of risk. If you would invest  1,546  in Western Asset Investment on September 15, 2024 and sell it today you would earn a total of  131.00  from holding Western Asset Investment or generate 8.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.4%
Values	Daily Returns

Western Asset Investment  vs.  Ark Restaurants Corp

Western Asset Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ark Restaurants Corp

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ark Restaurants Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent forward-looking signals, Ark Restaurants reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Western Asset and Ark Restaurants

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

The idea behind Western Asset Investment and Ark Restaurants Corp 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.