Correlation Between Keg Royalties and Boston Pizza

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

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

Diversification Opportunities for Keg Royalties and Boston Pizza

0.65

Correlation Coefficient

Keg Royalties  Boston Pizza

Poor diversification

The 3 months correlation between Keg and Boston is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding The Keg Royalties and Boston Pizza Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Pizza Royalties and Keg Royalties 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 The Keg Royalties are associated (or correlated) with Boston Pizza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Pizza Royalties has no effect on the direction of Keg Royalties i.e., Keg Royalties and Boston Pizza go up and down completely randomly.

Pair Corralation between Keg Royalties and Boston Pizza

Assuming the 90 days trading horizon The Keg Royalties is expected to generate 6.06 times more return on investment than Boston Pizza. However, Keg Royalties is 6.06 times more volatile than Boston Pizza Royalties. It trades about 0.15 of its potential returns per unit of risk. Boston Pizza Royalties is currently generating about 0.45 per unit of risk. If you would invest  1,389  in The Keg Royalties on April 22, 2025 and sell it today you would earn a total of  485.00  from holding The Keg Royalties or generate 34.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

The Keg Royalties  vs.  Boston Pizza Royalties

Keg Royalties

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Keg Royalties are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Keg Royalties sustained solid returns over the last few months and may actually be approaching a breakup point.

Boston Pizza Royalties

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Pizza Royalties are ranked lower than 35 (%) 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.

Pair Trading with Keg Royalties and Boston Pizza

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

The idea behind The Keg Royalties and Boston Pizza Royalties 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.