Correlation Between Darden Restaurants and Cracker Barrel
Can any of the company-specific risk be diversified away by investing in both Darden Restaurants 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 Darden Restaurants and Cracker Barrel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Darden Restaurants and Cracker Barrel Old, you can compare the effects of market volatilities on Darden Restaurants 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 Darden Restaurants with a short position of Cracker Barrel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Darden Restaurants and Cracker Barrel.
Diversification Opportunities for Darden Restaurants and Cracker Barrel
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Darden and Cracker is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Darden Restaurants 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 Darden Restaurants 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 Darden Restaurants 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 Darden Restaurants i.e., Darden Restaurants and Cracker Barrel go up and down completely randomly.
Pair Corralation between Darden Restaurants and Cracker Barrel
Considering the 90-day investment horizon Darden Restaurants is expected to generate 0.48 times more return on investment than Cracker Barrel. However, Darden Restaurants is 2.09 times less risky than Cracker Barrel. It trades about 0.03 of its potential returns per unit of risk. Cracker Barrel Old is currently generating about -0.03 per unit of risk. If you would invest 15,437 in Darden Restaurants on August 27, 2024 and sell it today you would earn a total of 1,332 from holding Darden Restaurants or generate 8.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Darden Restaurants vs. Cracker Barrel Old
Performance |
| Timeline |
| Darden Restaurants |
| Cracker Barrel Old |
Darden Restaurants and Cracker Barrel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Darden Restaurants and Cracker Barrel
The main advantage of trading using opposite Darden Restaurants and Cracker Barrel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Darden Restaurants 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.| Darden Restaurants vs. Dine Brands Global | Darden Restaurants vs. Bloomin Brands | Darden Restaurants vs. BJs Restaurants | Darden Restaurants vs. The Cheesecake Factory |
| 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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