Correlation Between Restaurant Brands and Jack In

Can any of the company-specific risk be diversified away by investing in both Restaurant Brands and Jack In 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 Jack In 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 Jack In The, you can compare the effects of market volatilities on Restaurant Brands and Jack In 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 Jack In. Check out your portfolio center. Please also check ongoing floating volatility patterns of Restaurant Brands and Jack In.

Diversification Opportunities for Restaurant Brands and Jack In

0.39

Correlation Coefficient

Restaurant Brands  Jack In

Weak diversification

The 3 months correlation between Restaurant and Jack is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Restaurant Brands Internationa and Jack In The in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jack In 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 Jack In. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jack In has no effect on the direction of Restaurant Brands i.e., Restaurant Brands and Jack In go up and down completely randomly.

Pair Corralation between Restaurant Brands and Jack In

Considering the 90-day investment horizon Restaurant Brands International is expected to generate 0.46 times more return on investment than Jack In. However, Restaurant Brands International is 2.18 times less risky than Jack In. It trades about -0.08 of its potential returns per unit of risk. Jack In The is currently generating about -0.05 per unit of risk. If you would invest  7,065  in Restaurant Brands International on September 27, 2024 and sell it today you would lose (481.00) from holding Restaurant Brands International or give up 6.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Restaurant Brands Internationa  vs.  Jack In The

Restaurant Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Restaurant Brands International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

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 latest unfluctuating performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Restaurant Brands and Jack In

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

The idea behind Restaurant Brands International and Jack In The 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.