Correlation Between Cheesecake Factory and 11041RAL2

Can any of the company-specific risk be diversified away by investing in both Cheesecake Factory and 11041RAL2 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 11041RAL2 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 BALN 75 01 JUL 27, you can compare the effects of market volatilities on Cheesecake Factory and 11041RAL2 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 11041RAL2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheesecake Factory and 11041RAL2.

Diversification Opportunities for Cheesecake Factory and 11041RAL2

0.55

Correlation Coefficient

Cheesecake Factory  11041RAL2

Very weak diversification

The 3 months correlation between Cheesecake and 11041RAL2 is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and BALN 75 01 JUL 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BALN 75 01 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 11041RAL2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BALN 75 01 has no effect on the direction of Cheesecake Factory i.e., Cheesecake Factory and 11041RAL2 go up and down completely randomly.

Pair Corralation between Cheesecake Factory and 11041RAL2

Given the investment horizon of 90 days The Cheesecake Factory is expected to generate 6.65 times more return on investment than 11041RAL2. However, Cheesecake Factory is 6.65 times more volatile than BALN 75 01 JUL 27. It trades about 0.1 of its potential returns per unit of risk. BALN 75 01 JUL 27 is currently generating about 0.0 per unit of risk. If you would invest  3,734  in The Cheesecake Factory on September 30, 2024 and sell it today you would earn a total of  1,065  from holding The Cheesecake Factory or generate 28.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	38.1%
Values	Daily Returns

The Cheesecake Factory  vs.  BALN 75 01 JUL 27

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.

BALN 75 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BALN 75 01 JUL 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for BALN 75 01 JUL 27 investors.

Pair Trading with Cheesecake Factory and 11041RAL2

The main advantage of trading using opposite Cheesecake Factory and 11041RAL2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheesecake Factory position performs unexpectedly, 11041RAL2 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 11041RAL2 will offset losses from the drop in 11041RAL2's long position.

The idea behind The Cheesecake Factory and BALN 75 01 JUL 27 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.