Correlation Between Carrols Restaurant and Noodles

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

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

Diversification Opportunities for Carrols Restaurant and Noodles

0.0

Correlation Coefficient

Carrols Restaurant  Noodles

Pay attention - limited upside

The 3 months correlation between Carrols and Noodles is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Carrols Restaurant Group and Noodles Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noodles Company and Carrols Restaurant 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 Carrols Restaurant Group are associated (or correlated) with Noodles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noodles Company has no effect on the direction of Carrols Restaurant i.e., Carrols Restaurant and Noodles go up and down completely randomly.

Pair Corralation between Carrols Restaurant and Noodles

If you would invest  546.00  in Carrols Restaurant Group on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Carrols Restaurant Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Carrols Restaurant Group  vs.  Noodles Company

Carrols Restaurant

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carrols Restaurant Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Carrols Restaurant is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Noodles Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Noodles Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Carrols Restaurant and Noodles

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

The idea behind Carrols Restaurant Group and Noodles Company 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.