Correlation Between Cheesecake Factory and RAYTHEON

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

Diversification Opportunities for Cheesecake Factory and RAYTHEON

-0.61

Correlation Coefficient

Cheesecake Factory  RAYTHEON

Excellent diversification

The 3 months correlation between Cheesecake and RAYTHEON is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and RAYTHEON TECHNOLOGIES PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RAYTHEON TECHNOLOGIES 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 RAYTHEON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RAYTHEON TECHNOLOGIES has no effect on the direction of Cheesecake Factory i.e., Cheesecake Factory and RAYTHEON go up and down completely randomly.

Pair Corralation between Cheesecake Factory and RAYTHEON

Given the investment horizon of 90 days The Cheesecake Factory is expected to under-perform the RAYTHEON. In addition to that, Cheesecake Factory is 2.05 times more volatile than RAYTHEON TECHNOLOGIES PORATION. It trades about -0.04 of its total potential returns per unit of risk. RAYTHEON TECHNOLOGIES PORATION is currently generating about 0.12 per unit of volatility. If you would invest  8,812  in RAYTHEON TECHNOLOGIES PORATION on October 11, 2024 and sell it today you would earn a total of  188.00  from holding RAYTHEON TECHNOLOGIES PORATION or generate 2.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

The Cheesecake Factory  vs.  RAYTHEON TECHNOLOGIES PORATION

The Cheesecake Factory

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Cheesecake Factory are ranked lower than 13 (%) 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.

RAYTHEON TECHNOLOGIES

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RAYTHEON TECHNOLOGIES PORATION are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, RAYTHEON is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cheesecake Factory and RAYTHEON

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

The idea behind The Cheesecake Factory and RAYTHEON TECHNOLOGIES PORATION 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.