Correlation Between Good Times and Cracker Barrel
Can any of the company-specific risk be diversified away by investing in both Good Times 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 Good Times and Cracker Barrel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Good Times Restaurants and Cracker Barrel Old, you can compare the effects of market volatilities on Good Times 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 Good Times with a short position of Cracker Barrel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Good Times and Cracker Barrel.
Diversification Opportunities for Good Times and Cracker Barrel
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Good and Cracker is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Good Times 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 Good Times 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 Good Times 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 Good Times i.e., Good Times and Cracker Barrel go up and down completely randomly.
Pair Corralation between Good Times and Cracker Barrel
Given the investment horizon of 90 days Good Times Restaurants is expected to under-perform the Cracker Barrel. But the stock apears to be less risky and, when comparing its historical volatility, Good Times Restaurants is 2.83 times less risky than Cracker Barrel. The stock trades about -0.02 of its potential returns per unit of risk. The Cracker Barrel Old is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,583 in Cracker Barrel Old on September 12, 2024 and sell it today you would earn a total of 621.00 from holding Cracker Barrel Old or generate 13.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Good Times Restaurants vs. Cracker Barrel Old
Performance |
| Timeline |
| Good Times Restaurants |
| Cracker Barrel Old |
Good Times and Cracker Barrel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Good Times and Cracker Barrel
The main advantage of trading using opposite Good Times and Cracker Barrel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Good Times 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.| Good Times vs. Noble Romans | Good Times vs. Flanigans Enterprises | Good Times vs. FAT Brands | Good Times vs. El Pollo Loco |
| Cracker Barrel vs. Noble Romans | Cracker Barrel vs. Good Times Restaurants | Cracker Barrel vs. Flanigans Enterprises | Cracker Barrel vs. FAT Brands |
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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