Correlation Between FAT Brands and Best Buy
Can any of the company-specific risk be diversified away by investing in both FAT Brands and Best Buy 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 FAT Brands and Best Buy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FAT Brands and Best Buy Co, you can compare the effects of market volatilities on FAT Brands and Best Buy 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 FAT Brands with a short position of Best Buy. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAT Brands and Best Buy.
Diversification Opportunities for FAT Brands and Best Buy
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between FAT and Best is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding FAT Brands and Best Buy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Best Buy and FAT 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 FAT Brands are associated (or correlated) with Best Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Best Buy has no effect on the direction of FAT Brands i.e., FAT Brands and Best Buy go up and down completely randomly.
Pair Corralation between FAT Brands and Best Buy
Considering the 90-day investment horizon FAT Brands is expected to generate 1.98 times more return on investment than Best Buy. However, FAT Brands is 1.98 times more volatile than Best Buy Co. It trades about 0.03 of its potential returns per unit of risk. Best Buy Co is currently generating about 0.04 per unit of risk. If you would invest 706.00 in FAT Brands on January 24, 2024 and sell it today you would earn a total of 18.00 from holding FAT Brands or generate 2.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAT Brands vs. Best Buy Co
Performance |
| Timeline |
| FAT Brands |
| Best Buy |
FAT Brands and Best Buy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAT Brands and Best Buy
The main advantage of trading using opposite FAT Brands and Best Buy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAT Brands position performs unexpectedly, Best Buy 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 Best Buy will offset losses from the drop in Best Buy's long position.| FAT Brands vs. FAT Brands | FAT Brands vs. Cannae Holdings | FAT Brands vs. Nathans Famous | FAT Brands vs. Dine Brands Global |
| Best Buy vs. Target | Best Buy vs. Walmart | Best Buy vs. Aquagold International | Best Buy vs. Thrivent High Yield |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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