Correlation Between E Home and Restaurant Brands
Can any of the company-specific risk be diversified away by investing in both E Home 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 E Home and Restaurant Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E Home Household Service and Restaurant Brands International, you can compare the effects of market volatilities on E Home 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 E Home with a short position of Restaurant Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Home and Restaurant Brands.
Diversification Opportunities for E Home and Restaurant Brands
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between EJH and Restaurant is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding E Home Household Service and Restaurant Brands Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Restaurant Brands and E Home 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 E Home Household Service 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 E Home i.e., E Home and Restaurant Brands go up and down completely randomly.
Pair Corralation between E Home and Restaurant Brands
Considering the 90-day investment horizon E Home Household Service is expected to under-perform the Restaurant Brands. In addition to that, E Home is 8.39 times more volatile than Restaurant Brands International. It trades about -0.04 of its total potential returns per unit of risk. Restaurant Brands International is currently generating about 0.01 per unit of volatility. If you would invest 6,860 in Restaurant Brands International on May 1, 2025 and sell it today you would earn a total of 22.00 from holding Restaurant Brands International or generate 0.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
E Home Household Service vs. Restaurant Brands Internationa
Performance |
| Timeline |
| E Home Household |
| Restaurant Brands |
E Home and Restaurant Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Home and Restaurant Brands
The main advantage of trading using opposite E Home and Restaurant Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Home 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 E Home Household Service 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.| Restaurant Brands vs. The Wendys Co | Restaurant Brands vs. Yum Brands | Restaurant Brands vs. Dominos Pizza Common | Restaurant Brands vs. Darden Restaurants |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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