Correlation Between Jollibee Foods and Nathans Famous

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

By analyzing existing cross correlation between Jollibee Foods Corp and Nathans Famous, you can compare the effects of market volatilities on Jollibee Foods and Nathans Famous 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 Jollibee Foods with a short position of Nathans Famous. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jollibee Foods and Nathans Famous.

Diversification Opportunities for Jollibee Foods and Nathans Famous

0.35

Correlation Coefficient

Jollibee Foods  Nathans Famous

Weak diversification

The 3 months correlation between Jollibee and Nathans is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Jollibee Foods Corp and Nathans Famous in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nathans Famous and Jollibee Foods 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 Jollibee Foods Corp are associated (or correlated) with Nathans Famous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nathans Famous has no effect on the direction of Jollibee Foods i.e., Jollibee Foods and Nathans Famous go up and down completely randomly.

Pair Corralation between Jollibee Foods and Nathans Famous

Assuming the 90 days horizon Jollibee Foods Corp is expected to generate 1.54 times more return on investment than Nathans Famous. However, Jollibee Foods is 1.54 times more volatile than Nathans Famous. It trades about 0.04 of its potential returns per unit of risk. Nathans Famous is currently generating about 0.05 per unit of risk. If you would invest  1,679  in Jollibee Foods Corp on September 12, 2024 and sell it today you would earn a total of  295.00  from holding Jollibee Foods Corp or generate 17.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	86.1%
Values	Daily Returns

Jollibee Foods Corp  vs.  Nathans Famous

Jollibee Foods Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jollibee Foods Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent fundamental indicators, Jollibee Foods showed solid returns over the last few months and may actually be approaching a breakup point.

Nathans Famous

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nathans Famous are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Nathans Famous may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Jollibee Foods and Nathans Famous

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

The idea behind Jollibee Foods Corp and Nathans Famous 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.