Correlation Between TFI International and Cheesecake Factory
Can any of the company-specific risk be diversified away by investing in both TFI International 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 TFI International and Cheesecake Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TFI International and The Cheesecake Factory, you can compare the effects of market volatilities on TFI International 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 TFI International with a short position of Cheesecake Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of TFI International and Cheesecake Factory.
Diversification Opportunities for TFI International and Cheesecake Factory
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between TFI and Cheesecake is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding TFI International 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 TFI International 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 TFI International 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 TFI International i.e., TFI International and Cheesecake Factory go up and down completely randomly.
Pair Corralation between TFI International and Cheesecake Factory
Given the investment horizon of 90 days TFI International is expected to generate 1.85 times less return on investment than Cheesecake Factory. But when comparing it to its historical volatility, TFI International is 1.28 times less risky than Cheesecake Factory. It trades about 0.06 of its potential returns per unit of risk. The Cheesecake Factory is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,742 in The Cheesecake Factory on August 26, 2024 and sell it today you would earn a total of 914.00 from holding The Cheesecake Factory or generate 24.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TFI International vs. The Cheesecake Factory
Performance |
| Timeline |
| TFI International |
| The Cheesecake Factory |
TFI International and Cheesecake Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TFI International and Cheesecake Factory
The main advantage of trading using opposite TFI International and Cheesecake Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TFI International 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.| TFI International vs. Old Dominion Freight | TFI International vs. ArcBest Corp | TFI International vs. Knight Transportation | TFI International vs. Universal Logistics 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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