Correlation Between Cheesecake Factory and Guardian Pharmacy

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

Diversification Opportunities for Cheesecake Factory and Guardian Pharmacy

-0.19

Correlation Coefficient

Cheesecake Factory  Guardian Pharmacy

Good diversification

The 3 months correlation between Cheesecake and Guardian is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and Guardian Pharmacy Services, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Pharmacy 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 Guardian Pharmacy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian Pharmacy has no effect on the direction of Cheesecake Factory i.e., Cheesecake Factory and Guardian Pharmacy go up and down completely randomly.

Pair Corralation between Cheesecake Factory and Guardian Pharmacy

Given the investment horizon of 90 days The Cheesecake Factory is expected to generate 0.56 times more return on investment than Guardian Pharmacy. However, The Cheesecake Factory is 1.78 times less risky than Guardian Pharmacy. It trades about -0.11 of its potential returns per unit of risk. Guardian Pharmacy Services, is currently generating about -0.13 per unit of risk. If you would invest  5,671  in The Cheesecake Factory on December 3, 2024 and sell it today you would lose (268.00) from holding The Cheesecake Factory or give up 4.73% of portfolio value over 90 days.

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

The Cheesecake Factory  vs.  Guardian Pharmacy Services,

The Cheesecake Factory

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Cheesecake Factory are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating forward-looking signals, Cheesecake Factory may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Guardian Pharmacy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guardian Pharmacy Services, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Cheesecake Factory and Guardian Pharmacy

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

The idea behind The Cheesecake Factory and Guardian Pharmacy Services, 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.