Correlation Between Cheesecake Factory and Apogee Enterprises

Can any of the company-specific risk be diversified away by investing in both Cheesecake Factory and Apogee Enterprises 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 Cheesecake Factory and Apogee Enterprises into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Cheesecake Factory and Apogee Enterprises, you can compare the effects of market volatilities on Cheesecake Factory and Apogee Enterprises 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 Cheesecake Factory with a short position of Apogee Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheesecake Factory and Apogee Enterprises.

Diversification Opportunities for Cheesecake Factory and Apogee Enterprises

0.55

Correlation Coefficient

Cheesecake Factory  Apogee Enterprises

Very weak diversification

The 3 months correlation between Cheesecake and Apogee is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and Apogee Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apogee Enterprises and Cheesecake Factory 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 Cheesecake Factory are associated (or correlated) with Apogee Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apogee Enterprises has no effect on the direction of Cheesecake Factory i.e., Cheesecake Factory and Apogee Enterprises go up and down completely randomly.

Pair Corralation between Cheesecake Factory and Apogee Enterprises

Given the investment horizon of 90 days Cheesecake Factory is expected to generate 1.23 times less return on investment than Apogee Enterprises. In addition to that, Cheesecake Factory is 1.04 times more volatile than Apogee Enterprises. It trades about 0.05 of its total potential returns per unit of risk. Apogee Enterprises is currently generating about 0.06 per unit of volatility. If you would invest  4,207  in Apogee Enterprises on September 26, 2024 and sell it today you would earn a total of  3,000  from holding Apogee Enterprises or generate 71.31% return on investment over 90 days.

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

The Cheesecake Factory  vs.  Apogee Enterprises

The Cheesecake Factory

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Cheesecake Factory are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating forward-looking signals, Cheesecake Factory exhibited solid returns over the last few months and may actually be approaching a breakup point.

Apogee Enterprises

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Apogee Enterprises are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Apogee Enterprises may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cheesecake Factory and Apogee Enterprises

The main advantage of trading using opposite Cheesecake Factory and Apogee Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheesecake Factory position performs unexpectedly, Apogee Enterprises 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 Apogee Enterprises will offset losses from the drop in Apogee Enterprises' long position.

The idea behind The Cheesecake Factory and Apogee Enterprises 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.