Correlation Between Cheesecake Factory and Loop Media

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

Diversification Opportunities for Cheesecake Factory and Loop Media

-0.78

Correlation Coefficient

Cheesecake Factory  Loop Media

Pay attention - limited upside

The 3 months correlation between Cheesecake and Loop is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and Loop Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loop Media 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 Loop Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loop Media has no effect on the direction of Cheesecake Factory i.e., Cheesecake Factory and Loop Media go up and down completely randomly.

Pair Corralation between Cheesecake Factory and Loop Media

Given the investment horizon of 90 days The Cheesecake Factory is expected to generate 0.1 times more return on investment than Loop Media. However, The Cheesecake Factory is 9.99 times less risky than Loop Media. It trades about 0.1 of its potential returns per unit of risk. Loop Media is currently generating about -0.14 per unit of risk. If you would invest  3,841  in The Cheesecake Factory on September 28, 2024 and sell it today you would earn a total of  966.00  from holding The Cheesecake Factory or generate 25.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	11.43%
Values	Daily Returns

The Cheesecake Factory  vs.  Loop Media

The Cheesecake Factory

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Cheesecake Factory are ranked lower than 9 (%) 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.

Loop Media

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Cheesecake Factory and Loop Media

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

The idea behind The Cheesecake Factory and Loop Media 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.