Correlation Between Restaurant Brands and HelloFresh

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

By analyzing existing cross correlation between Restaurant Brands International and HelloFresh SE, you can compare the effects of market volatilities on Restaurant Brands and HelloFresh 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 Restaurant Brands with a short position of HelloFresh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Restaurant Brands and HelloFresh.

Diversification Opportunities for Restaurant Brands and HelloFresh

0.1

Correlation Coefficient

Restaurant Brands  HelloFresh

Average diversification

The 3 months correlation between Restaurant and HelloFresh is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Restaurant Brands Internationa and HelloFresh SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HelloFresh SE and Restaurant Brands 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 Restaurant Brands International are associated (or correlated) with HelloFresh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HelloFresh SE has no effect on the direction of Restaurant Brands i.e., Restaurant Brands and HelloFresh go up and down completely randomly.

Pair Corralation between Restaurant Brands and HelloFresh

Considering the 90-day investment horizon Restaurant Brands is expected to generate 17.43 times less return on investment than HelloFresh. But when comparing it to its historical volatility, Restaurant Brands International is 5.08 times less risky than HelloFresh. It trades about 0.04 of its potential returns per unit of risk. HelloFresh SE is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  798.00  in HelloFresh SE on September 1, 2024 and sell it today you would earn a total of  402.00  from holding HelloFresh SE or generate 50.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Restaurant Brands Internationa  vs.  HelloFresh SE

Restaurant Brands

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Restaurant Brands International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Restaurant Brands is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

HelloFresh SE

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HelloFresh SE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, HelloFresh reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Restaurant Brands and HelloFresh

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

The idea behind Restaurant Brands International and HelloFresh SE 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.