Correlation Between Cracker Barrel and Meli Hotels
Can any of the company-specific risk be diversified away by investing in both Cracker Barrel and Meli Hotels 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 Meli Hotels 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 Meli Hotels International, you can compare the effects of market volatilities on Cracker Barrel and Meli Hotels 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 Meli Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cracker Barrel and Meli Hotels.
Diversification Opportunities for Cracker Barrel and Meli Hotels
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cracker and Meli is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Cracker Barrel Old and Meli Hotels International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meli Hotels International 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 Meli Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meli Hotels International has no effect on the direction of Cracker Barrel i.e., Cracker Barrel and Meli Hotels go up and down completely randomly.
Pair Corralation between Cracker Barrel and Meli Hotels
Given the investment horizon of 90 days Cracker Barrel Old is expected to generate 1.92 times more return on investment than Meli Hotels. However, Cracker Barrel is 1.92 times more volatile than Meli Hotels International. It trades about 0.19 of its potential returns per unit of risk. Meli Hotels International is currently generating about 0.1 per unit of risk. If you would invest 3,645 in Cracker Barrel Old on September 12, 2024 and sell it today you would earn a total of 1,650 from holding Cracker Barrel Old or generate 45.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Cracker Barrel Old vs. Meli Hotels International
Performance |
| Timeline |
| Cracker Barrel Old |
| Meli Hotels International |
Cracker Barrel and Meli Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cracker Barrel and Meli Hotels
The main advantage of trading using opposite Cracker Barrel and Meli Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cracker Barrel position performs unexpectedly, Meli Hotels 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 Meli Hotels will offset losses from the drop in Meli Hotels' long position.| Cracker Barrel vs. Brinker International | Cracker Barrel vs. BJs Restaurants | Cracker Barrel vs. Texas Roadhouse | Cracker Barrel vs. Papa Johns International |
| Meli Hotels vs. Marriott International | Meli Hotels vs. Hilton Worldwide Holdings | Meli Hotels vs. InterContinental Hotels Group | Meli Hotels vs. Accor SA |
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 CEOs Directory module to screen CEOs from public companies around the world.
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