Correlation Between Texas Roadhouse and Cracker Barrel
Can any of the company-specific risk be diversified away by investing in both Texas Roadhouse 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 Texas Roadhouse and Cracker Barrel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Texas Roadhouse and Cracker Barrel Old, you can compare the effects of market volatilities on Texas Roadhouse 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 Texas Roadhouse with a short position of Cracker Barrel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Texas Roadhouse and Cracker Barrel.
Diversification Opportunities for Texas Roadhouse and Cracker Barrel
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Texas and Cracker is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Texas Roadhouse 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 Texas Roadhouse 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 Texas Roadhouse 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 Texas Roadhouse i.e., Texas Roadhouse and Cracker Barrel go up and down completely randomly.
Pair Corralation between Texas Roadhouse and Cracker Barrel
Given the investment horizon of 90 days Texas Roadhouse is expected to generate 1.5 times less return on investment than Cracker Barrel. But when comparing it to its historical volatility, Texas Roadhouse is 1.93 times less risky than Cracker Barrel. It trades about 0.19 of its potential returns per unit of risk. Cracker Barrel Old is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,955 in Cracker Barrel Old on August 29, 2024 and sell it today you would earn a total of 1,240 from holding Cracker Barrel Old or generate 31.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.44% |
| Values | Daily Returns |
Texas Roadhouse vs. Cracker Barrel Old
Performance |
| Timeline |
| Texas Roadhouse |
| Cracker Barrel Old |
Texas Roadhouse and Cracker Barrel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Texas Roadhouse and Cracker Barrel
The main advantage of trading using opposite Texas Roadhouse and Cracker Barrel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Texas Roadhouse 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.| Texas Roadhouse vs. Jack In The | Texas Roadhouse vs. Potbelly Co | Texas Roadhouse vs. BJs Restaurants | Texas Roadhouse vs. One Group Hospitality |
| Cracker Barrel vs. Jack In The | Cracker Barrel vs. Potbelly Co | Cracker Barrel vs. BJs Restaurants | Cracker Barrel vs. One Group Hospitality |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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