Correlation Between Jack In and FAT Brands
Can any of the company-specific risk be diversified away by investing in both Jack In and FAT Brands 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 Jack In and FAT Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jack In The and FAT Brands, you can compare the effects of market volatilities on Jack In and FAT Brands 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 Jack In with a short position of FAT Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jack In and FAT Brands.
Diversification Opportunities for Jack In and FAT Brands
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Jack and FAT is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Jack In The and FAT Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAT Brands and Jack In 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 Jack In The are associated (or correlated) with FAT Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAT Brands has no effect on the direction of Jack In i.e., Jack In and FAT Brands go up and down completely randomly.
Pair Corralation between Jack In and FAT Brands
Given the investment horizon of 90 days Jack In The is expected to under-perform the FAT Brands. But the stock apears to be less risky and, when comparing its historical volatility, Jack In The is 1.32 times less risky than FAT Brands. The stock trades about -0.24 of its potential returns per unit of risk. The FAT Brands is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 851.00 in FAT Brands on January 25, 2024 and sell it today you would lose (101.00) from holding FAT Brands or give up 11.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jack In The vs. FAT Brands
Performance |
| Timeline |
| Jack In |
| FAT Brands |
Jack In and FAT Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jack In and FAT Brands
The main advantage of trading using opposite Jack In and FAT Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jack In position performs unexpectedly, FAT Brands 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 FAT Brands will offset losses from the drop in FAT Brands' long position.| Jack In vs. Dine Brands Global | Jack In vs. Bloomin Brands | Jack In vs. BJs Restaurants | Jack In vs. The Cheesecake Factory |
| FAT Brands vs. FAT Brands | FAT Brands vs. Cannae Holdings | FAT Brands vs. Nathans Famous | FAT Brands vs. Dine Brands Global |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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