Correlation Between Western Digital and Cracker Barrel
Can any of the company-specific risk be diversified away by investing in both Western Digital 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 Western Digital and Cracker Barrel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Digital and Cracker Barrel Old, you can compare the effects of market volatilities on Western Digital 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 Western Digital with a short position of Cracker Barrel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Digital and Cracker Barrel.
Diversification Opportunities for Western Digital and Cracker Barrel
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Cracker is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital 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 Western Digital 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 Western Digital 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 Western Digital i.e., Western Digital and Cracker Barrel go up and down completely randomly.
Pair Corralation between Western Digital and Cracker Barrel
Considering the 90-day investment horizon Western Digital is expected to generate 0.76 times more return on investment than Cracker Barrel. However, Western Digital is 1.32 times less risky than Cracker Barrel. It trades about 0.1 of its potential returns per unit of risk. Cracker Barrel Old is currently generating about 0.0 per unit of risk. If you would invest 4,317 in Western Digital on September 1, 2024 and sell it today you would earn a total of 2,982 from holding Western Digital or generate 69.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Digital vs. Cracker Barrel Old
Performance |
| Timeline |
| Western Digital |
| Cracker Barrel Old |
Western Digital and Cracker Barrel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Digital and Cracker Barrel
The main advantage of trading using opposite Western Digital and Cracker Barrel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Digital 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.| Western Digital vs. Rigetti Computing | Western Digital vs. D Wave Quantum | Western Digital vs. IONQ Inc | Western Digital vs. Desktop Metal |
| 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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