Correlation Between Cheesecake Factory and TYCO INTERNATIONAL

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

Diversification Opportunities for Cheesecake Factory and TYCO INTERNATIONAL

0.0

Correlation Coefficient

Cheesecake Factory  TYCO INTERNATIONAL

Pay attention - limited upside

The 3 months correlation between Cheesecake and TYCO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and TYCO INTERNATIONAL Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TYCO INTERNATIONAL Plc 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 TYCO INTERNATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TYCO INTERNATIONAL Plc has no effect on the direction of Cheesecake Factory i.e., Cheesecake Factory and TYCO INTERNATIONAL go up and down completely randomly.

Pair Corralation between Cheesecake Factory and TYCO INTERNATIONAL

If you would invest (100.00) in TYCO INTERNATIONAL Plc on September 24, 2024 and sell it today you would earn a total of  100.00  from holding TYCO INTERNATIONAL Plc or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

The Cheesecake Factory  vs.  TYCO INTERNATIONAL Plc

The Cheesecake Factory

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Cheesecake Factory are ranked lower than 10 (%) 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.

TYCO INTERNATIONAL Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TYCO INTERNATIONAL Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, TYCO INTERNATIONAL is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cheesecake Factory and TYCO INTERNATIONAL

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

The idea behind The Cheesecake Factory and TYCO INTERNATIONAL Plc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.