Correlation Between Cracker Barrel and Citizens
Can any of the company-specific risk be diversified away by investing in both Cracker Barrel and Citizens 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 Citizens 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 Citizens, you can compare the effects of market volatilities on Cracker Barrel and Citizens 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 Citizens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cracker Barrel and Citizens.
Diversification Opportunities for Cracker Barrel and Citizens
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cracker and Citizens is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Cracker Barrel Old and Citizens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens 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 Citizens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens has no effect on the direction of Cracker Barrel i.e., Cracker Barrel and Citizens go up and down completely randomly.
Pair Corralation between Cracker Barrel and Citizens
Given the investment horizon of 90 days Cracker Barrel Old is expected to generate 0.99 times more return on investment than Citizens. However, Cracker Barrel Old is 1.01 times less risky than Citizens. It trades about 0.1 of its potential returns per unit of risk. Citizens is currently generating about -0.08 per unit of risk. If you would invest 4,951 in Cracker Barrel Old on August 31, 2024 and sell it today you would earn a total of 325.00 from holding Cracker Barrel Old or generate 6.56% 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. Citizens
Performance |
| Timeline |
| Cracker Barrel Old |
| Citizens |
Cracker Barrel and Citizens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cracker Barrel and Citizens
The main advantage of trading using opposite Cracker Barrel and Citizens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cracker Barrel position performs unexpectedly, Citizens 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 Citizens will offset losses from the drop in Citizens' long position.| Cracker Barrel vs. Brinker International | Cracker Barrel vs. BJs Restaurants | Cracker Barrel vs. Texas Roadhouse | Cracker Barrel vs. Papa Johns International |
| Citizens vs. Lincoln National | Citizens vs. Aflac Incorporated | Citizens vs. Unum Group | Citizens vs. Manulife Financial Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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