Correlation Between Cheesecake Factory and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both Cheesecake Factory and Cardinal Health 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 Cardinal Health 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 Cardinal Health, you can compare the effects of market volatilities on Cheesecake Factory and Cardinal Health 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 Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheesecake Factory and Cardinal Health.
Diversification Opportunities for Cheesecake Factory and Cardinal Health
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cheesecake and Cardinal is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health 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 Cardinal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Health has no effect on the direction of Cheesecake Factory i.e., Cheesecake Factory and Cardinal Health go up and down completely randomly.
Pair Corralation between Cheesecake Factory and Cardinal Health
Given the investment horizon of 90 days The Cheesecake Factory is expected to generate 1.96 times more return on investment than Cardinal Health. However, Cheesecake Factory is 1.96 times more volatile than Cardinal Health. It trades about 0.08 of its potential returns per unit of risk. Cardinal Health is currently generating about 0.1 per unit of risk. If you would invest 4,955 in The Cheesecake Factory on December 1, 2024 and sell it today you would earn a total of 448.00 from holding The Cheesecake Factory or generate 9.04% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
The Cheesecake Factory vs. Cardinal Health
Performance |
Timeline |
The Cheesecake Factory |
Cardinal Health |
Cheesecake Factory and Cardinal Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cheesecake Factory and Cardinal Health
The main advantage of trading using opposite Cheesecake Factory and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheesecake Factory position performs unexpectedly, Cardinal Health 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 Cardinal Health will offset losses from the drop in Cardinal Health's long position.Cheesecake Factory vs. Dine Brands Global | Cheesecake Factory vs. Bloomin Brands | Cheesecake Factory vs. BJs Restaurants | Cheesecake Factory vs. Brinker International |
Cardinal Health vs. Henry Schein | Cardinal Health vs. Owens Minor | Cardinal Health vs. Patterson Companies | Cardinal Health vs. McKesson |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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