Correlation Between Hyatt Hotels and Cheesecake Factory
Can any of the company-specific risk be diversified away by investing in both Hyatt Hotels and Cheesecake Factory 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 Hyatt Hotels and Cheesecake Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyatt Hotels and The Cheesecake Factory, you can compare the effects of market volatilities on Hyatt Hotels and Cheesecake Factory 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 Hyatt Hotels with a short position of Cheesecake Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyatt Hotels and Cheesecake Factory.
Diversification Opportunities for Hyatt Hotels and Cheesecake Factory
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hyatt and Cheesecake is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and The Cheesecake Factory in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Cheesecake Factory and Hyatt Hotels 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 Hyatt Hotels are associated (or correlated) with Cheesecake Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Cheesecake Factory has no effect on the direction of Hyatt Hotels i.e., Hyatt Hotels and Cheesecake Factory go up and down completely randomly.
Pair Corralation between Hyatt Hotels and Cheesecake Factory
Taking into account the 90-day investment horizon Hyatt Hotels is expected to generate 1.03 times less return on investment than Cheesecake Factory. But when comparing it to its historical volatility, Hyatt Hotels is 1.16 times less risky than Cheesecake Factory. It trades about 0.22 of its potential returns per unit of risk. The Cheesecake Factory is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,529 in The Cheesecake Factory on September 4, 2024 and sell it today you would earn a total of 426.00 from holding The Cheesecake Factory or generate 9.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyatt Hotels vs. The Cheesecake Factory
Performance |
| Timeline |
| Hyatt Hotels |
| The Cheesecake Factory |
Hyatt Hotels and Cheesecake Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyatt Hotels and Cheesecake Factory
The main advantage of trading using opposite Hyatt Hotels and Cheesecake Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyatt Hotels position performs unexpectedly, Cheesecake Factory 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 Cheesecake Factory will offset losses from the drop in Cheesecake Factory's long position.| Hyatt Hotels vs. Marriott International | Hyatt Hotels vs. InterContinental Hotels Group | Hyatt Hotels vs. Choice Hotels International | Hyatt Hotels vs. Wyndham Hotels Resorts |
| Cheesecake Factory vs. Hyatt Hotels | Cheesecake Factory vs. Smart Share Global | Cheesecake Factory vs. Sweetgreen | Cheesecake Factory vs. Wyndham Hotels Resorts |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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