Correlation Between Carrols Restaurant and BANORT

Can any of the company-specific risk be diversified away by investing in both Carrols Restaurant and BANORT 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 BANORT 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 BANORT 8 38, you can compare the effects of market volatilities on Carrols Restaurant and BANORT 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 BANORT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carrols Restaurant and BANORT.

Diversification Opportunities for Carrols Restaurant and BANORT

0.66

Correlation Coefficient

Carrols Restaurant  BANORT

Poor diversification

The 3 months correlation between Carrols and BANORT is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Carrols Restaurant Group and BANORT 8 38 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANORT 8 38 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 BANORT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANORT 8 38 has no effect on the direction of Carrols Restaurant i.e., Carrols Restaurant and BANORT go up and down completely randomly.

Pair Corralation between Carrols Restaurant and BANORT

Given the investment horizon of 90 days Carrols Restaurant Group is expected to generate 0.06 times more return on investment than BANORT. However, Carrols Restaurant Group is 16.89 times less risky than BANORT. It trades about 0.22 of its potential returns per unit of risk. BANORT 8 38 is currently generating about -0.19 per unit of risk. If you would invest  943.00  in Carrols Restaurant Group on January 25, 2024 and sell it today you would earn a total of  8.00  from holding Carrols Restaurant Group or generate 0.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	69.05%
Values	Daily Returns

Carrols Restaurant Group  vs.  BANORT 8 38

Carrols Restaurant

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carrols Restaurant Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. 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.

BANORT 8 38

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANORT 8 38 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for BANORT 8 38 investors.

Pair Trading with Carrols Restaurant and BANORT

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

The idea behind Carrols Restaurant Group and BANORT 8 38 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.