Correlation Between Cheesecake Factory and HNI Corp
Can any of the company-specific risk be diversified away by investing in both Cheesecake Factory and HNI Corp 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 HNI Corp 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 HNI Corp, you can compare the effects of market volatilities on Cheesecake Factory and HNI Corp 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 HNI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheesecake Factory and HNI Corp.
Diversification Opportunities for Cheesecake Factory and HNI Corp
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cheesecake and HNI is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and HNI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HNI Corp 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 HNI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HNI Corp has no effect on the direction of Cheesecake Factory i.e., Cheesecake Factory and HNI Corp go up and down completely randomly.
Pair Corralation between Cheesecake Factory and HNI Corp
Given the investment horizon of 90 days Cheesecake Factory is expected to generate 1.44 times less return on investment than HNI Corp. In addition to that, Cheesecake Factory is 1.16 times more volatile than HNI Corp. It trades about 0.05 of its total potential returns per unit of risk. HNI Corp is currently generating about 0.09 per unit of volatility. If you would invest 2,670 in HNI Corp on September 1, 2024 and sell it today you would earn a total of 2,995 from holding HNI Corp or generate 112.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Cheesecake Factory vs. HNI Corp
Performance |
| Timeline |
| The Cheesecake Factory |
| HNI Corp |
Cheesecake Factory and HNI Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheesecake Factory and HNI Corp
The main advantage of trading using opposite Cheesecake Factory and HNI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheesecake Factory position performs unexpectedly, HNI Corp 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 HNI Corp will offset losses from the drop in HNI Corp's long position.| Cheesecake Factory vs. The Wendys Co | Cheesecake Factory vs. Shake Shack | Cheesecake Factory vs. Papa Johns International | Cheesecake Factory 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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