Correlation Between Cheesecake Factory and Cumberland Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Cheesecake Factory and Cumberland Pharmaceuticals 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 Cheesecake Factory and Cumberland Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Cheesecake Factory and Cumberland Pharmaceuticals, you can compare the effects of market volatilities on Cheesecake Factory and Cumberland Pharmaceuticals 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 Cheesecake Factory with a short position of Cumberland Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheesecake Factory and Cumberland Pharmaceuticals.
Diversification Opportunities for Cheesecake Factory and Cumberland Pharmaceuticals
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cheesecake and Cumberland is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and Cumberland Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumberland Pharmaceuticals and Cheesecake Factory 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 Cheesecake Factory are associated (or correlated) with Cumberland Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cumberland Pharmaceuticals has no effect on the direction of Cheesecake Factory i.e., Cheesecake Factory and Cumberland Pharmaceuticals go up and down completely randomly.
Pair Corralation between Cheesecake Factory and Cumberland Pharmaceuticals
Given the investment horizon of 90 days Cheesecake Factory is expected to generate 2.31 times less return on investment than Cumberland Pharmaceuticals. But when comparing it to its historical volatility, The Cheesecake Factory is 3.11 times less risky than Cumberland Pharmaceuticals. It trades about 0.06 of its potential returns per unit of risk. Cumberland Pharmaceuticals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 158.00 in Cumberland Pharmaceuticals on September 12, 2024 and sell it today you would earn a total of 86.00 from holding Cumberland Pharmaceuticals or generate 54.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Cheesecake Factory vs. Cumberland Pharmaceuticals
Performance |
| Timeline |
| The Cheesecake Factory |
| Cumberland Pharmaceuticals |
Cheesecake Factory and Cumberland Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheesecake Factory and Cumberland Pharmaceuticals
The main advantage of trading using opposite Cheesecake Factory and Cumberland Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheesecake Factory position performs unexpectedly, Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals will offset losses from the drop in Cumberland Pharmaceuticals' long position.| Cheesecake Factory vs. Dine Brands Global | Cheesecake Factory vs. Bloomin Brands | Cheesecake Factory vs. BJs Restaurants | Cheesecake Factory vs. Brinker International |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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