Correlation Between Modine Manufacturing and Cheesecake Factory
Can any of the company-specific risk be diversified away by investing in both Modine Manufacturing 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 Modine Manufacturing and Cheesecake Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Modine Manufacturing and The Cheesecake Factory, you can compare the effects of market volatilities on Modine Manufacturing 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 Modine Manufacturing with a short position of Cheesecake Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modine Manufacturing and Cheesecake Factory.
Diversification Opportunities for Modine Manufacturing and Cheesecake Factory
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Modine and Cheesecake is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Modine Manufacturing 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 Modine Manufacturing 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 Modine Manufacturing 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 Modine Manufacturing i.e., Modine Manufacturing and Cheesecake Factory go up and down completely randomly.
Pair Corralation between Modine Manufacturing and Cheesecake Factory
Considering the 90-day investment horizon Modine Manufacturing is expected to under-perform the Cheesecake Factory. In addition to that, Modine Manufacturing is 1.88 times more volatile than The Cheesecake Factory. It trades about -0.11 of its total potential returns per unit of risk. The Cheesecake Factory is currently generating about 0.09 per unit of volatility. If you would invest 5,183 in The Cheesecake Factory on November 28, 2024 and sell it today you would earn a total of 182.00 from holding The Cheesecake Factory or generate 3.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Modine Manufacturing vs. The Cheesecake Factory
Performance |
| Timeline |
| Modine Manufacturing |
| The Cheesecake Factory |
Modine Manufacturing and Cheesecake Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Modine Manufacturing and Cheesecake Factory
The main advantage of trading using opposite Modine Manufacturing and Cheesecake Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modine Manufacturing 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.| Modine Manufacturing vs. Cooper Stnd | Modine Manufacturing vs. Motorcar Parts of | Modine Manufacturing vs. American Axle Manufacturing | Modine Manufacturing vs. Stoneridge |
| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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