Correlation Between Cracker Barrel and Cheesecake Factory
Can any of the company-specific risk be diversified away by investing in both Cracker Barrel 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 Cracker Barrel and Cheesecake Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cracker Barrel Old and The Cheesecake Factory, you can compare the effects of market volatilities on Cracker Barrel 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 Cracker Barrel with a short position of Cheesecake Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cracker Barrel and Cheesecake Factory.
Diversification Opportunities for Cracker Barrel and Cheesecake Factory
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cracker and Cheesecake is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cracker Barrel Old 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 Cracker Barrel 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 Cracker Barrel Old 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 Cracker Barrel i.e., Cracker Barrel and Cheesecake Factory go up and down completely randomly.
Pair Corralation between Cracker Barrel and Cheesecake Factory
Given the investment horizon of 90 days Cracker Barrel Old is expected to generate 1.46 times more return on investment than Cheesecake Factory. However, Cracker Barrel is 1.46 times more volatile than The Cheesecake Factory. It trades about 0.17 of its potential returns per unit of risk. The Cheesecake Factory is currently generating about 0.17 per unit of risk. If you would invest 3,833 in Cracker Barrel Old on November 2, 2024 and sell it today you would earn a total of 2,638 from holding Cracker Barrel Old or generate 68.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cracker Barrel Old vs. The Cheesecake Factory
Performance |
| Timeline |
| Cracker Barrel Old |
| The Cheesecake Factory |
Cracker Barrel and Cheesecake Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cracker Barrel and Cheesecake Factory
The main advantage of trading using opposite Cracker Barrel and Cheesecake Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cracker Barrel 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.| Cracker Barrel vs. Brinker International | Cracker Barrel vs. BJs Restaurants | Cracker Barrel vs. Texas Roadhouse | Cracker Barrel vs. Papa Johns International |
| 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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