Correlation Between Ark Restaurants and Cracker Barrel

Can any of the company-specific risk be diversified away by investing in both Ark Restaurants 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 Ark Restaurants and Cracker Barrel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ark Restaurants Corp and Cracker Barrel Old, you can compare the effects of market volatilities on Ark Restaurants 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 Ark Restaurants with a short position of Cracker Barrel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ark Restaurants and Cracker Barrel.

Diversification Opportunities for Ark Restaurants and Cracker Barrel

0.0

Correlation Coefficient

Ark Restaurants  Cracker Barrel

Pay attention - limited upside

The 3 months correlation between Ark and Cracker is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ark Restaurants Corp 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 Ark Restaurants 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 Ark Restaurants Corp 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 Ark Restaurants i.e., Ark Restaurants and Cracker Barrel go up and down completely randomly.

Pair Corralation between Ark Restaurants and Cracker Barrel

Given the investment horizon of 90 days Ark Restaurants Corp is expected to generate 2.42 times more return on investment than Cracker Barrel. However, Ark Restaurants is 2.42 times more volatile than Cracker Barrel Old. It trades about 0.12 of its potential returns per unit of risk. Cracker Barrel Old is currently generating about 0.16 per unit of risk. If you would invest  1,025  in Ark Restaurants Corp on September 19, 2024 and sell it today you would earn a total of  154.00  from holding Ark Restaurants Corp or generate 15.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ark Restaurants Corp  vs.  Cracker Barrel Old

Ark Restaurants Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ark Restaurants Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward-looking signals, Ark Restaurants is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Cracker Barrel Old

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cracker Barrel Old are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Cracker Barrel disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ark Restaurants and Cracker Barrel

The main advantage of trading using opposite Ark Restaurants and Cracker Barrel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ark Restaurants 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 Ark Restaurants Corp 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.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.