Correlation Between Wendys and Cracker Barrel
Can any of the company-specific risk be diversified away by investing in both Wendys 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 Wendys and Cracker Barrel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Wendys Co and Cracker Barrel Old, you can compare the effects of market volatilities on Wendys 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 Wendys with a short position of Cracker Barrel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wendys and Cracker Barrel.
Diversification Opportunities for Wendys and Cracker Barrel
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wendys and Cracker is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding The Wendys Co 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 Wendys 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 The Wendys Co 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 Wendys i.e., Wendys and Cracker Barrel go up and down completely randomly.
Pair Corralation between Wendys and Cracker Barrel
Considering the 90-day investment horizon The Wendys Co is expected to generate 0.53 times more return on investment than Cracker Barrel. However, The Wendys Co is 1.87 times less risky than Cracker Barrel. It trades about 0.02 of its potential returns per unit of risk. Cracker Barrel Old is currently generating about -0.04 per unit of risk. If you would invest 1,734 in The Wendys Co on August 25, 2024 and sell it today you would earn a total of 64.00 from holding The Wendys Co or generate 3.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Wendys Co vs. Cracker Barrel Old
Performance |
| Timeline |
| The Wendys |
| Cracker Barrel Old |
Wendys and Cracker Barrel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wendys and Cracker Barrel
The main advantage of trading using opposite Wendys and Cracker Barrel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wendys 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.The idea behind The Wendys Co and Cracker Barrel Old pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Cracker Barrel vs. Brinker International | Cracker Barrel vs. BJs Restaurants | Cracker Barrel vs. Texas Roadhouse | Cracker Barrel vs. Papa Johns 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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