Correlation Between Cracker Barrel and Compania Cervecerias
Can any of the company-specific risk be diversified away by investing in both Cracker Barrel and Compania Cervecerias 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 Compania Cervecerias 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 Compania Cervecerias Unidas, you can compare the effects of market volatilities on Cracker Barrel and Compania Cervecerias 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 Compania Cervecerias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cracker Barrel and Compania Cervecerias.
Diversification Opportunities for Cracker Barrel and Compania Cervecerias
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cracker and Compania is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cracker Barrel Old and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias 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 Compania Cervecerias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania Cervecerias has no effect on the direction of Cracker Barrel i.e., Cracker Barrel and Compania Cervecerias go up and down completely randomly.
Pair Corralation between Cracker Barrel and Compania Cervecerias
Given the investment horizon of 90 days Cracker Barrel Old is expected to generate 2.26 times more return on investment than Compania Cervecerias. However, Cracker Barrel is 2.26 times more volatile than Compania Cervecerias Unidas. It trades about 0.23 of its potential returns per unit of risk. Compania Cervecerias Unidas is currently generating about 0.17 per unit of risk. If you would invest 4,757 in Cracker Barrel Old on September 1, 2024 and sell it today you would earn a total of 799.00 from holding Cracker Barrel Old or generate 16.8% 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. Compania Cervecerias Unidas
Performance |
| Timeline |
| Cracker Barrel Old |
| Compania Cervecerias |
Cracker Barrel and Compania Cervecerias Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cracker Barrel and Compania Cervecerias
The main advantage of trading using opposite Cracker Barrel and Compania Cervecerias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cracker Barrel position performs unexpectedly, Compania Cervecerias 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 Compania Cervecerias will offset losses from the drop in Compania Cervecerias' long position.| Cracker Barrel vs. The Wendys Co | Cracker Barrel vs. Shake Shack | Cracker Barrel vs. Papa Johns International | Cracker Barrel vs. Darden Restaurants |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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