Correlation Between Cincinnati Financial and Cracker Barrel
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Cracker Barrel 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 Cincinnati Financial and Cracker Barrel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and Cracker Barrel Old, you can compare the effects of market volatilities on Cincinnati Financial and Cracker Barrel 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 Cincinnati Financial with a short position of Cracker Barrel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Cracker Barrel.
Diversification Opportunities for Cincinnati Financial and Cracker Barrel
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cincinnati and Cracker is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and Cracker Barrel Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cracker Barrel Old and Cincinnati Financial 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 Cincinnati Financial are associated (or correlated) with Cracker Barrel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cracker Barrel Old has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Cracker Barrel go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Cracker Barrel
Given the investment horizon of 90 days Cincinnati Financial is expected to generate 1.38 times less return on investment than Cracker Barrel. But when comparing it to its historical volatility, Cincinnati Financial is 1.99 times less risky than Cracker Barrel. It trades about 0.35 of its potential returns per unit of risk. Cracker Barrel Old is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 4,698 in Cracker Barrel Old on September 2, 2024 and sell it today you would earn a total of 858.00 from holding Cracker Barrel Old or generate 18.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cincinnati Financial vs. Cracker Barrel Old
Performance |
| Timeline |
| Cincinnati Financial |
| Cracker Barrel Old |
Cincinnati Financial and Cracker Barrel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Cracker Barrel
The main advantage of trading using opposite Cincinnati Financial and Cracker Barrel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Cracker Barrel 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 Cracker Barrel will offset losses from the drop in Cracker Barrel's long position.| Cincinnati Financial vs. Progressive Corp | Cincinnati Financial vs. The Travelers Companies | Cincinnati Financial vs. Chubb | Cincinnati Financial vs. W R Berkley |
| Cracker Barrel vs. Brinker International | Cracker Barrel vs. BJs Restaurants | Cracker Barrel vs. Texas Roadhouse | Cracker Barrel vs. Papa Johns International |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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