Correlation Between SkyWest and Cracker Barrel
Can any of the company-specific risk be diversified away by investing in both SkyWest 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 SkyWest and Cracker Barrel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SkyWest and Cracker Barrel Old, you can compare the effects of market volatilities on SkyWest 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 SkyWest with a short position of Cracker Barrel. Check out your portfolio center. Please also check ongoing floating volatility patterns of SkyWest and Cracker Barrel.
Diversification Opportunities for SkyWest and Cracker Barrel
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SkyWest and Cracker is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SkyWest 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 SkyWest 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 SkyWest 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 SkyWest i.e., SkyWest and Cracker Barrel go up and down completely randomly.
Pair Corralation between SkyWest and Cracker Barrel
Given the investment horizon of 90 days SkyWest is expected to generate 0.74 times more return on investment than Cracker Barrel. However, SkyWest is 1.35 times less risky than Cracker Barrel. It trades about 0.35 of its potential returns per unit of risk. Cracker Barrel Old is currently generating about 0.23 per unit of risk. If you would invest 9,520 in SkyWest on September 1, 2024 and sell it today you would earn a total of 1,954 from holding SkyWest or generate 20.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SkyWest vs. Cracker Barrel Old
Performance |
| Timeline |
| SkyWest |
| Cracker Barrel Old |
SkyWest and Cracker Barrel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SkyWest and Cracker Barrel
The main advantage of trading using opposite SkyWest and Cracker Barrel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SkyWest 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.| SkyWest vs. Canadian Pacific Railway | SkyWest vs. Werner Enterprises | SkyWest vs. Canadian National Railway | SkyWest vs. CSX Corporation |
| Cracker Barrel vs. The Wendys Co | Cracker Barrel vs. Shake Shack | Cracker Barrel vs. Papa Johns International | Cracker Barrel vs. Darden Restaurants |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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