Correlation Between Cheesecake Factory and KEYBANK

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

Diversification Opportunities for Cheesecake Factory and KEYBANK

0.17

Correlation Coefficient

Cheesecake Factory  KEYBANK

Average diversification

The 3 months correlation between Cheesecake and KEYBANK is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and KEYBANK NATL ASSN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEYBANK NATL ASSN 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 KEYBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEYBANK NATL ASSN has no effect on the direction of Cheesecake Factory i.e., Cheesecake Factory and KEYBANK go up and down completely randomly.

Pair Corralation between Cheesecake Factory and KEYBANK

Given the investment horizon of 90 days The Cheesecake Factory is expected to generate 2.39 times more return on investment than KEYBANK. However, Cheesecake Factory is 2.39 times more volatile than KEYBANK NATL ASSN. It trades about 0.08 of its potential returns per unit of risk. KEYBANK NATL ASSN is currently generating about -0.12 per unit of risk. If you would invest  3,932  in The Cheesecake Factory on September 25, 2024 and sell it today you would earn a total of  870.00  from holding The Cheesecake Factory or generate 22.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	52.38%
Values	Daily Returns

The Cheesecake Factory  vs.  KEYBANK NATL ASSN

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.

KEYBANK NATL ASSN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEYBANK NATL ASSN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for KEYBANK NATL ASSN investors.

Pair Trading with Cheesecake Factory and KEYBANK

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

The idea behind The Cheesecake Factory and KEYBANK NATL ASSN 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.