Correlation Between CAVA Group, and Cheesecake Factory
Can any of the company-specific risk be diversified away by investing in both CAVA Group, and Cheesecake Factory 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 CAVA Group, and Cheesecake Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAVA Group, and The Cheesecake Factory, you can compare the effects of market volatilities on CAVA Group, and Cheesecake Factory 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 CAVA Group, with a short position of Cheesecake Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAVA Group, and Cheesecake Factory.
Diversification Opportunities for CAVA Group, and Cheesecake Factory
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CAVA and Cheesecake is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding CAVA Group, and The Cheesecake Factory in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Cheesecake Factory and CAVA Group, 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 CAVA Group, are associated (or correlated) with Cheesecake Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Cheesecake Factory has no effect on the direction of CAVA Group, i.e., CAVA Group, and Cheesecake Factory go up and down completely randomly.
Pair Corralation between CAVA Group, and Cheesecake Factory
Given the investment horizon of 90 days CAVA Group, is expected to generate 1.24 times less return on investment than Cheesecake Factory. In addition to that, CAVA Group, is 1.15 times more volatile than The Cheesecake Factory. It trades about 0.11 of its total potential returns per unit of risk. The Cheesecake Factory is currently generating about 0.16 per unit of volatility. If you would invest 4,638 in The Cheesecake Factory on August 31, 2024 and sell it today you would earn a total of 336.00 from holding The Cheesecake Factory or generate 7.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAVA Group, vs. The Cheesecake Factory
Performance |
| Timeline |
| CAVA Group, |
| The Cheesecake Factory |
CAVA Group, and Cheesecake Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAVA Group, and Cheesecake Factory
The main advantage of trading using opposite CAVA Group, and Cheesecake Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAVA Group, position performs unexpectedly, Cheesecake Factory 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 Cheesecake Factory will offset losses from the drop in Cheesecake Factory's long position.| CAVA Group, vs. Wingstop | CAVA Group, vs. RLJ Lodging Trust | CAVA Group, vs. Aquagold International | CAVA Group, vs. Stepstone Group |
| Cheesecake Factory vs. Wingstop | Cheesecake Factory vs. RLJ Lodging Trust | Cheesecake Factory vs. Aquagold International | Cheesecake Factory vs. Stepstone Group |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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