Correlation Between Cheesecake Factory and Expand Energy
Can any of the company-specific risk be diversified away by investing in both Cheesecake Factory and Expand Energy 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 Expand Energy 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 Expand Energy, you can compare the effects of market volatilities on Cheesecake Factory and Expand Energy 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 Expand Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheesecake Factory and Expand Energy.
Diversification Opportunities for Cheesecake Factory and Expand Energy
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cheesecake and Expand is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and Expand Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expand Energy 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 Expand Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expand Energy has no effect on the direction of Cheesecake Factory i.e., Cheesecake Factory and Expand Energy go up and down completely randomly.
Pair Corralation between Cheesecake Factory and Expand Energy
Given the investment horizon of 90 days The Cheesecake Factory is expected to generate 0.96 times more return on investment than Expand Energy. However, The Cheesecake Factory is 1.04 times less risky than Expand Energy. It trades about 0.05 of its potential returns per unit of risk. Expand Energy is currently generating about 0.01 per unit of risk. If you would invest 3,189 in The Cheesecake Factory on September 3, 2024 and sell it today you would earn a total of 1,875 from holding The Cheesecake Factory or generate 58.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Cheesecake Factory vs. Expand Energy
Performance |
| Timeline |
| The Cheesecake Factory |
| Expand Energy |
Cheesecake Factory and Expand Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheesecake Factory and Expand Energy
The main advantage of trading using opposite Cheesecake Factory and Expand Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheesecake Factory position performs unexpectedly, Expand Energy 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 Expand Energy will offset losses from the drop in Expand Energy's long position.| Cheesecake Factory vs. Highway Holdings Limited | Cheesecake Factory vs. QCR Holdings | Cheesecake Factory vs. Partner Communications | Cheesecake Factory vs. Acumen Pharmaceuticals |
| Expand Energy vs. Dominos Pizza | Expand Energy vs. Aegon NV ADR | Expand Energy vs. The Cheesecake Factory | Expand Energy vs. Guangdong Investment Limited |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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