Correlation Between Cheesecake Factory and FG Merger

Can any of the company-specific risk be diversified away by investing in both Cheesecake Factory and FG Merger 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 FG Merger 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 FG Merger Corp, you can compare the effects of market volatilities on Cheesecake Factory and FG Merger 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 FG Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheesecake Factory and FG Merger.

Diversification Opportunities for Cheesecake Factory and FG Merger

-0.08

Correlation Coefficient

Cheesecake Factory  FG Merger

Good diversification

The 3 months correlation between Cheesecake and FGMCW is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and FG Merger Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FG Merger Corp 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 FG Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FG Merger Corp has no effect on the direction of Cheesecake Factory i.e., Cheesecake Factory and FG Merger go up and down completely randomly.

Pair Corralation between Cheesecake Factory and FG Merger

If you would invest  4,180  in The Cheesecake Factory on October 25, 2024 and sell it today you would earn a total of  915.00  from holding The Cheesecake Factory or generate 21.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

The Cheesecake Factory  vs.  FG Merger Corp

The Cheesecake Factory

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Cheesecake Factory are ranked lower than 11 (%) 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.

FG Merger Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FG Merger Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, FG Merger is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Cheesecake Factory and FG Merger

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

The idea behind The Cheesecake Factory and FG Merger Corp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.