Correlation Between Boot Barn and Cracker Barrel

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

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

Diversification Opportunities for Boot Barn and Cracker Barrel

0.92

Correlation Coefficient

Boot Barn  Cracker Barrel

Almost no diversification

The 3 months correlation between Boot and Cracker is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Boot Barn Holdings 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 Boot Barn 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 Boot Barn Holdings 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 Boot Barn i.e., Boot Barn and Cracker Barrel go up and down completely randomly.

Pair Corralation between Boot Barn and Cracker Barrel

Given the investment horizon of 90 days Boot Barn Holdings is expected to under-perform the Cracker Barrel. But the stock apears to be less risky and, when comparing its historical volatility, Boot Barn Holdings is 1.17 times less risky than Cracker Barrel. The stock trades about -0.16 of its potential returns per unit of risk. The Cracker Barrel Old is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  5,664  in Cracker Barrel Old on December 25, 2024 and sell it today you would lose (1,562) from holding Cracker Barrel Old or give up 27.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Boot Barn Holdings  vs.  Cracker Barrel Old

Boot Barn Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boot Barn Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Cracker Barrel Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cracker Barrel Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Boot Barn and Cracker Barrel

The main advantage of trading using opposite Boot Barn and Cracker Barrel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boot Barn 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 Boot Barn Holdings 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..