Correlation Between Cheesecake Factory and Talen Energy
Can any of the company-specific risk be diversified away by investing in both Cheesecake Factory and Talen 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 Talen 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 Talen Energy, you can compare the effects of market volatilities on Cheesecake Factory and Talen 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 Talen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheesecake Factory and Talen Energy.
Diversification Opportunities for Cheesecake Factory and Talen Energy
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cheesecake and Talen is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and Talen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talen 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 Talen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talen Energy has no effect on the direction of Cheesecake Factory i.e., Cheesecake Factory and Talen Energy go up and down completely randomly.
Pair Corralation between Cheesecake Factory and Talen Energy
Given the investment horizon of 90 days Cheesecake Factory is expected to generate 4.96 times less return on investment than Talen Energy. But when comparing it to its historical volatility, The Cheesecake Factory is 1.46 times less risky than Talen Energy. It trades about 0.03 of its potential returns per unit of risk. Talen Energy is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 20,442 in Talen Energy on November 29, 2024 and sell it today you would earn a total of 1,329 from holding Talen Energy or generate 6.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Cheesecake Factory vs. Talen Energy
Performance |
| Timeline |
| The Cheesecake Factory |
| Talen Energy |
Cheesecake Factory and Talen Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheesecake Factory and Talen Energy
The main advantage of trading using opposite Cheesecake Factory and Talen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheesecake Factory position performs unexpectedly, Talen 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 Talen Energy will offset losses from the drop in Talen Energy's long position.| Cheesecake Factory vs. Dine Brands Global | Cheesecake Factory vs. Bloomin Brands | Cheesecake Factory vs. BJs Restaurants | Cheesecake Factory vs. Brinker International |
| Talen Energy vs. Diageo PLC ADR | Talen Energy vs. NETGEAR | Talen Energy vs. National CineMedia | Talen Energy vs. KVH Industries |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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