Correlation Between Jack In and Potbelly

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

By analyzing existing cross correlation between Jack In The and Potbelly Co, you can compare the effects of market volatilities on Jack In and Potbelly 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 Jack In with a short position of Potbelly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jack In and Potbelly.

Diversification Opportunities for Jack In and Potbelly

-0.05

Correlation Coefficient

Jack In  Potbelly

Good diversification

The 3 months correlation between Jack and Potbelly is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Jack In The and Potbelly Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Potbelly and Jack In 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 Jack In The are associated (or correlated) with Potbelly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Potbelly has no effect on the direction of Jack In i.e., Jack In and Potbelly go up and down completely randomly.

Pair Corralation between Jack In and Potbelly

Given the investment horizon of 90 days Jack In The is expected to under-perform the Potbelly. But the stock apears to be less risky and, when comparing its historical volatility, Jack In The is 1.32 times less risky than Potbelly. The stock trades about -0.02 of its potential returns per unit of risk. The Potbelly Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  798.00  in Potbelly Co on August 30, 2024 and sell it today you would earn a total of  222.00  from holding Potbelly Co or generate 27.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Jack In The  vs.  Potbelly Co

Jack In

Risk-Adjusted Performance

0 of 100

Very Weak

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

Potbelly

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Potbelly Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Potbelly sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jack In and Potbelly

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

The idea behind Jack In The and Potbelly Co 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.