Correlation Between QuantShares Enhanced and Restaurant Brands

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Can any of the company-specific risk be diversified away by investing in both QuantShares Enhanced and Restaurant 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 QuantShares Enhanced and Restaurant Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between QuantShares Enhanced Core and Restaurant Brands International, you can compare the effects of market volatilities on QuantShares Enhanced and Restaurant 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 QuantShares Enhanced with a short position of Restaurant Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of QuantShares Enhanced and Restaurant Brands.

Diversification Opportunities for QuantShares Enhanced and Restaurant Brands

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between QuantShares and Restaurant is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding QuantShares Enhanced Core and Restaurant Brands Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Restaurant Brands and QuantShares Enhanced 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 QuantShares Enhanced Core are associated (or correlated) with Restaurant Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Restaurant Brands has no effect on the direction of QuantShares Enhanced i.e., QuantShares Enhanced and Restaurant Brands go up and down completely randomly.

Pair Corralation between QuantShares Enhanced and Restaurant Brands

Assuming the 90 days trading horizon QuantShares Enhanced is expected to generate 2.08 times less return on investment than Restaurant Brands. But when comparing it to its historical volatility, QuantShares Enhanced Core is 2.86 times less risky than Restaurant Brands. It trades about 0.27 of its potential returns per unit of risk. Restaurant Brands International is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  10,143  in Restaurant Brands International on December 29, 2023 and sell it today you would earn a total of  591.00  from holding Restaurant Brands International or generate 5.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.65%
ValuesDaily Returns

QuantShares Enhanced Core  vs.  Restaurant Brands Internationa

 Performance 
       Timeline  
QuantShares Enhanced Core 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in QuantShares Enhanced Core are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, QuantShares Enhanced is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
Restaurant Brands 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Restaurant Brands International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Restaurant Brands is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

QuantShares Enhanced and Restaurant Brands Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with QuantShares Enhanced and Restaurant Brands

The main advantage of trading using opposite QuantShares Enhanced and Restaurant Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QuantShares Enhanced position performs unexpectedly, Restaurant 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 Restaurant Brands will offset losses from the drop in Restaurant Brands' long position.
The idea behind QuantShares Enhanced Core and Restaurant Brands International 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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