Correlation Between Cheesecake Factory and 49327M3E2

Can any of the company-specific risk be diversified away by investing in both Cheesecake Factory and 49327M3E2 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 49327M3E2 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 KEY 415 08 AUG 25, you can compare the effects of market volatilities on Cheesecake Factory and 49327M3E2 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 49327M3E2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheesecake Factory and 49327M3E2.

Diversification Opportunities for Cheesecake Factory and 49327M3E2

0.74

Correlation Coefficient

Cheesecake Factory  49327M3E2

Poor diversification

The 3 months correlation between Cheesecake and 49327M3E2 is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and KEY 415 08 AUG 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEY 415 08 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 49327M3E2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEY 415 08 has no effect on the direction of Cheesecake Factory i.e., Cheesecake Factory and 49327M3E2 go up and down completely randomly.

Pair Corralation between Cheesecake Factory and 49327M3E2

Given the investment horizon of 90 days The Cheesecake Factory is expected to generate 13.74 times more return on investment than 49327M3E2. However, Cheesecake Factory is 13.74 times more volatile than KEY 415 08 AUG 25. It trades about 0.2 of its potential returns per unit of risk. KEY 415 08 AUG 25 is currently generating about -0.01 per unit of risk. If you would invest  3,848  in The Cheesecake Factory on October 10, 2024 and sell it today you would earn a total of  1,197  from holding The Cheesecake Factory or generate 31.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	88.52%
Values	Daily Returns

The Cheesecake Factory  vs.  KEY 415 08 AUG 25

The Cheesecake Factory

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Cheesecake Factory are ranked lower than 15 (%) 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.

KEY 415 08

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEY 415 08 AUG 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 49327M3E2 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cheesecake Factory and 49327M3E2

The main advantage of trading using opposite Cheesecake Factory and 49327M3E2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheesecake Factory position performs unexpectedly, 49327M3E2 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 49327M3E2 will offset losses from the drop in 49327M3E2's long position.

The idea behind The Cheesecake Factory and KEY 415 08 AUG 25 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.