Correlation Between Nathans Famous and Bagger Daves

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

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

Diversification Opportunities for Nathans Famous and Bagger Daves

-0.11

Correlation Coefficient

Nathans Famous  Bagger Daves

Good diversification

The 3 months correlation between Nathans and Bagger is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Nathans Famous and Bagger Daves Burger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bagger Daves Burger and Nathans Famous 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 Nathans Famous are associated (or correlated) with Bagger Daves. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bagger Daves Burger has no effect on the direction of Nathans Famous i.e., Nathans Famous and Bagger Daves go up and down completely randomly.

Pair Corralation between Nathans Famous and Bagger Daves

Given the investment horizon of 90 days Nathans Famous is expected to generate 0.38 times more return on investment than Bagger Daves. However, Nathans Famous is 2.65 times less risky than Bagger Daves. It trades about 0.08 of its potential returns per unit of risk. Bagger Daves Burger is currently generating about -0.01 per unit of risk. If you would invest  7,971  in Nathans Famous on September 17, 2024 and sell it today you would earn a total of  708.00  from holding Nathans Famous or generate 8.88% return on investment over 90 days.

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

Nathans Famous  vs.  Bagger Daves Burger

Nathans Famous

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nathans Famous are ranked lower than 5 (%) 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.

Bagger Daves Burger

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bagger Daves Burger has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bagger Daves is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nathans Famous and Bagger Daves

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

The idea behind Nathans Famous and Bagger Daves Burger 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.