Correlation Between Cheesecake Factory and Ruths Hospitality
Can any of the company-specific risk be diversified away by investing in both Cheesecake Factory and Ruths Hospitality 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 Ruths Hospitality 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 Ruths Hospitality Group, you can compare the effects of market volatilities on Cheesecake Factory and Ruths Hospitality 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 Ruths Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheesecake Factory and Ruths Hospitality.
Diversification Opportunities for Cheesecake Factory and Ruths Hospitality
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cheesecake and Ruths is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and Ruths Hospitality Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruths Hospitality 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 Ruths Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ruths Hospitality has no effect on the direction of Cheesecake Factory i.e., Cheesecake Factory and Ruths Hospitality go up and down completely randomly.
Pair Corralation between Cheesecake Factory and Ruths Hospitality
Given the investment horizon of 90 days The Cheesecake Factory is expected to generate 35.91 times more return on investment than Ruths Hospitality. However, Cheesecake Factory is 35.91 times more volatile than Ruths Hospitality Group. It trades about 0.06 of its potential returns per unit of risk. Ruths Hospitality Group is currently generating about 0.24 per unit of risk. If you would invest 3,104 in The Cheesecake Factory on August 27, 2024 and sell it today you would earn a total of 1,552 from holding The Cheesecake Factory or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 2.68% |
| Values | Daily Returns |
The Cheesecake Factory vs. Ruths Hospitality Group
Performance |
| Timeline |
| The Cheesecake Factory |
| Ruths Hospitality |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Cheesecake Factory and Ruths Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheesecake Factory and Ruths Hospitality
The main advantage of trading using opposite Cheesecake Factory and Ruths Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheesecake Factory position performs unexpectedly, Ruths Hospitality 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 Ruths Hospitality will offset losses from the drop in Ruths Hospitality's long position.| Cheesecake Factory vs. Dine Brands Global | Cheesecake Factory vs. Bloomin Brands | Cheesecake Factory vs. BJs Restaurants | Cheesecake Factory vs. Brinker International |
| Ruths Hospitality vs. Dine Brands Global | Ruths Hospitality vs. Bloomin Brands | Ruths Hospitality vs. BJs Restaurants | Ruths Hospitality vs. The Cheesecake Factory |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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