Correlation Between Cracker Barrel and Western Digital
Can any of the company-specific risk be diversified away by investing in both Cracker Barrel and Western Digital 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 Western Digital 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 Western Digital, you can compare the effects of market volatilities on Cracker Barrel and Western Digital 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 Western Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cracker Barrel and Western Digital.
Diversification Opportunities for Cracker Barrel and Western Digital
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cracker and Western is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Cracker Barrel Old and Western Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital 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 Western Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Digital has no effect on the direction of Cracker Barrel i.e., Cracker Barrel and Western Digital go up and down completely randomly.
Pair Corralation between Cracker Barrel and Western Digital
Given the investment horizon of 90 days Cracker Barrel Old is expected to under-perform the Western Digital. In addition to that, Cracker Barrel is 1.06 times more volatile than Western Digital. It trades about -0.49 of its total potential returns per unit of risk. Western Digital is currently generating about 0.14 per unit of volatility. If you would invest 6,440 in Western Digital on November 27, 2024 and sell it today you would earn a total of 431.00 from holding Western Digital or generate 6.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cracker Barrel Old vs. Western Digital
Performance |
| Timeline |
| Cracker Barrel Old |
| Western Digital |
Cracker Barrel and Western Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cracker Barrel and Western Digital
The main advantage of trading using opposite Cracker Barrel and Western Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cracker Barrel position performs unexpectedly, Western Digital 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 Western Digital will offset losses from the drop in Western Digital's long position.| Cracker Barrel vs. Brinker International | Cracker Barrel vs. BJs Restaurants | Cracker Barrel vs. Texas Roadhouse | Cracker Barrel vs. Papa Johns International |
| Western Digital vs. NetApp Inc | Western Digital vs. Logitech International SA | Western Digital vs. HP Inc | Western Digital vs. Dell Technologies |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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