Correlation Between Boston Pizza and A W

Can any of the company-specific risk be diversified away by investing in both Boston Pizza and A W 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 Boston Pizza and A W into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Boston Pizza Royalties and A W FOOD, you can compare the effects of market volatilities on Boston Pizza and A W 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 Boston Pizza with a short position of A W. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Pizza and A W.

Diversification Opportunities for Boston Pizza and A W

0.89

Correlation Coefficient

Boston Pizza  A W

Very poor diversification

The 3 months correlation between Boston and A W is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Boston Pizza Royalties and A W FOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A W FOOD and Boston Pizza 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 Boston Pizza Royalties are associated (or correlated) with A W. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A W FOOD has no effect on the direction of Boston Pizza i.e., Boston Pizza and A W go up and down completely randomly.

Pair Corralation between Boston Pizza and A W

Assuming the 90 days trading horizon Boston Pizza is expected to generate 1.56 times less return on investment than A W. But when comparing it to its historical volatility, Boston Pizza Royalties is 2.08 times less risky than A W. It trades about 0.35 of its potential returns per unit of risk. A W FOOD is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  3,153  in A W FOOD on April 23, 2025 and sell it today you would earn a total of  717.00  from holding A W FOOD or generate 22.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Boston Pizza Royalties  vs.  A W FOOD

Boston Pizza Royalties

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Pizza Royalties are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Boston Pizza sustained solid returns over the last few months and may actually be approaching a breakup point.

A W FOOD

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in A W FOOD are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, A W displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boston Pizza and A W

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

The idea behind Boston Pizza Royalties and A W FOOD 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 Stocks Directory module to find actively traded stocks across global markets.