Correlation Between Cracker Barrel and Meliá Hotels
Can any of the company-specific risk be diversified away by investing in both Cracker Barrel and Meliá 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 Meliá 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 Meliá 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 Meliá Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cracker Barrel and Meliá Hotels.
Diversification Opportunities for Cracker Barrel and Meliá Hotels
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cracker and Meliá is 0.8. 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 Meliá 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 Meliá Hotels go up and down completely randomly.
Pair Corralation between Cracker Barrel and Meliá Hotels
If you would invest 4,585 in Cracker Barrel Old on September 4, 2024 and sell it today you would earn a total of 1,079 from holding Cracker Barrel Old or generate 23.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Cracker Barrel Old vs. Meli Hotels International
Performance |
| Timeline |
| Cracker Barrel Old |
| Meli Hotels International |
Cracker Barrel and Meliá Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cracker Barrel and Meliá Hotels
The main advantage of trading using opposite Cracker Barrel and Meliá Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cracker Barrel position performs unexpectedly, Meliá 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 Meliá Hotels will offset losses from the drop in Meliá Hotels' long position.| Cracker Barrel vs. Brinker International | Cracker Barrel vs. BJs Restaurants | Cracker Barrel vs. Texas Roadhouse | Cracker Barrel vs. Papa Johns International |
| Meliá Hotels vs. Skillful Craftsman Education | Meliá Hotels vs. BJs Restaurants | Meliá Hotels vs. Cracker Barrel Old | Meliá Hotels vs. Sphere Entertainment Co |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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