Correlation Between Cheesecake Factory and VF
Can any of the company-specific risk be diversified away by investing in both Cheesecake Factory and VF 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 VF 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 VF Corporation, you can compare the effects of market volatilities on Cheesecake Factory and VF 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 VF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheesecake Factory and VF.
Diversification Opportunities for Cheesecake Factory and VF
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cheesecake and VF is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and VF Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VF Corporation 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 VF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VF Corporation has no effect on the direction of Cheesecake Factory i.e., Cheesecake Factory and VF go up and down completely randomly.
Pair Corralation between Cheesecake Factory and VF
Given the investment horizon of 90 days The Cheesecake Factory is expected to generate 0.6 times more return on investment than VF. However, The Cheesecake Factory is 1.66 times less risky than VF. It trades about 0.17 of its potential returns per unit of risk. VF Corporation is currently generating about 0.1 per unit of risk. If you would invest 3,871 in The Cheesecake Factory on November 2, 2024 and sell it today you would earn a total of 1,746 from holding The Cheesecake Factory or generate 45.1% 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. VF Corp.
Performance |
| Timeline |
| The Cheesecake Factory |
| VF Corporation |
Cheesecake Factory and VF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheesecake Factory and VF
The main advantage of trading using opposite Cheesecake Factory and VF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheesecake Factory position performs unexpectedly, VF 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 VF will offset losses from the drop in VF's long position.| Cheesecake Factory vs. Papa Johns International | Cheesecake Factory vs. Darden Restaurants | Cheesecake Factory vs. Yum China Holdings |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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