Correlation Between Hertz Global and Cheesecake Factory
Can any of the company-specific risk be diversified away by investing in both Hertz Global 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 Hertz Global and Cheesecake Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hertz Global Hldgs and The Cheesecake Factory, you can compare the effects of market volatilities on Hertz Global 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 Hertz Global with a short position of Cheesecake Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hertz Global and Cheesecake Factory.
Diversification Opportunities for Hertz Global and Cheesecake Factory
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hertz and Cheesecake is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Hldgs 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 Hertz Global 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 Hertz Global Hldgs 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 Hertz Global i.e., Hertz Global and Cheesecake Factory go up and down completely randomly.
Pair Corralation between Hertz Global and Cheesecake Factory
Assuming the 90 days horizon Hertz Global Hldgs is expected to generate 2.0 times more return on investment than Cheesecake Factory. However, Hertz Global is 2.0 times more volatile than The Cheesecake Factory. It trades about 0.11 of its potential returns per unit of risk. The Cheesecake Factory is currently generating about 0.17 per unit of risk. If you would invest 187.00 in Hertz Global Hldgs on November 2, 2024 and sell it today you would earn a total of 50.00 from holding Hertz Global Hldgs or generate 26.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hertz Global Hldgs vs. The Cheesecake Factory
Performance |
| Timeline |
| Hertz Global Hldgs |
| The Cheesecake Factory |
Hertz Global and Cheesecake Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hertz Global and Cheesecake Factory
The main advantage of trading using opposite Hertz Global and Cheesecake Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hertz Global 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.| Hertz Global vs. Hertz Global Holdings | Hertz Global vs. Avis Budget Group | Hertz Global vs. Herc Holdings | Hertz Global vs. Frontier Group Holdings |
| Cheesecake Factory vs. Dine Brands Global | Cheesecake Factory vs. Bloomin Brands | Cheesecake Factory vs. BJs Restaurants | Cheesecake Factory vs. Brinker 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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