Correlation Between Ruths Hospitality and Cheesecake Factory
Can any of the company-specific risk be diversified away by investing in both Ruths Hospitality 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 Ruths Hospitality and Cheesecake Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ruths Hospitality Group and The Cheesecake Factory, you can compare the effects of market volatilities on Ruths Hospitality 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 Ruths Hospitality with a short position of Cheesecake Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruths Hospitality and Cheesecake Factory.
Diversification Opportunities for Ruths Hospitality and Cheesecake Factory
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ruths and Cheesecake is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ruths Hospitality Group 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 Ruths Hospitality 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 Ruths Hospitality Group 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 Ruths Hospitality i.e., Ruths Hospitality and Cheesecake Factory go up and down completely randomly.
Pair Corralation between Ruths Hospitality and Cheesecake Factory
Given the investment horizon of 90 days Ruths Hospitality Group is expected to generate 1.84 times more return on investment than Cheesecake Factory. However, Ruths Hospitality is 1.84 times more volatile than The Cheesecake Factory. It trades about 0.08 of its potential returns per unit of risk. The Cheesecake Factory is currently generating about 0.03 per unit of risk. If you would invest 1,727 in Ruths Hospitality Group on August 27, 2024 and sell it today you would earn a total of 422.00 from holding Ruths Hospitality Group or generate 24.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 20.22% |
| Values | Daily Returns |
Ruths Hospitality Group vs. The Cheesecake Factory
Performance |
| Timeline |
| Ruths Hospitality |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| The Cheesecake Factory |
Ruths Hospitality and Cheesecake Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruths Hospitality and Cheesecake Factory
The main advantage of trading using opposite Ruths Hospitality and Cheesecake Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruths Hospitality 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.| Ruths Hospitality vs. Dine Brands Global | Ruths Hospitality vs. Bloomin Brands | Ruths Hospitality vs. BJs Restaurants | Ruths Hospitality vs. The Cheesecake Factory |
| 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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