Correlation Between Cracker Barrel and Drilling Tools
Can any of the company-specific risk be diversified away by investing in both Cracker Barrel and Drilling Tools 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 Drilling Tools 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 Drilling Tools International, you can compare the effects of market volatilities on Cracker Barrel and Drilling Tools 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 Drilling Tools. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cracker Barrel and Drilling Tools.
Diversification Opportunities for Cracker Barrel and Drilling Tools
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cracker and Drilling is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cracker Barrel Old and Drilling Tools International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Drilling Tools Inter 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 Drilling Tools. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Drilling Tools Inter has no effect on the direction of Cracker Barrel i.e., Cracker Barrel and Drilling Tools go up and down completely randomly.
Pair Corralation between Cracker Barrel and Drilling Tools
Given the investment horizon of 90 days Cracker Barrel Old is expected to generate 0.73 times more return on investment than Drilling Tools. However, Cracker Barrel Old is 1.37 times less risky than Drilling Tools. It trades about -0.03 of its potential returns per unit of risk. Drilling Tools International is currently generating about -0.04 per unit of risk. If you would invest 10,022 in Cracker Barrel Old on October 11, 2024 and sell it today you would lose (4,294) from holding Cracker Barrel Old or give up 42.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cracker Barrel Old vs. Drilling Tools International
Performance |
| Timeline |
| Cracker Barrel Old |
| Drilling Tools Inter |
Cracker Barrel and Drilling Tools Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cracker Barrel and Drilling Tools
The main advantage of trading using opposite Cracker Barrel and Drilling Tools positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cracker Barrel position performs unexpectedly, Drilling Tools 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 Drilling Tools will offset losses from the drop in Drilling Tools' long position.| Cracker Barrel vs. Brinker International | Cracker Barrel vs. BJs Restaurants | Cracker Barrel vs. Texas Roadhouse | Cracker Barrel vs. Papa Johns International |
| Drilling Tools vs. Air Transport Services | Drilling Tools vs. LATAM Airlines Group | Drilling Tools vs. Playtika Holding Corp | Drilling Tools vs. Canlan Ice Sports |
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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