Correlation Between United Guardian and Cheesecake Factory
Can any of the company-specific risk be diversified away by investing in both United Guardian 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 United Guardian and Cheesecake Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Guardian and The Cheesecake Factory, you can compare the effects of market volatilities on United Guardian 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 United Guardian with a short position of Cheesecake Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Guardian and Cheesecake Factory.
Diversification Opportunities for United Guardian and Cheesecake Factory
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and Cheesecake is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding United Guardian 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 United Guardian 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 United Guardian 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 United Guardian i.e., United Guardian and Cheesecake Factory go up and down completely randomly.
Pair Corralation between United Guardian and Cheesecake Factory
Allowing for the 90-day total investment horizon United Guardian is expected to under-perform the Cheesecake Factory. In addition to that, United Guardian is 1.32 times more volatile than The Cheesecake Factory. It trades about -0.35 of its total potential returns per unit of risk. The Cheesecake Factory is currently generating about 0.19 per unit of volatility. If you would invest 4,180 in The Cheesecake Factory on August 26, 2024 and sell it today you would earn a total of 476.00 from holding The Cheesecake Factory or generate 11.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Guardian vs. The Cheesecake Factory
Performance |
| Timeline |
| United Guardian |
| The Cheesecake Factory |
United Guardian and Cheesecake Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Guardian and Cheesecake Factory
The main advantage of trading using opposite United Guardian and Cheesecake Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Guardian 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.| United Guardian vs. Utah Medical Products | United Guardian vs. Union Bankshares | United Guardian vs. Psychemedics | United Guardian vs. Unity Bancorp |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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