Correlation Between Cheesecake Factory and UNITEDHEALTH

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

Diversification Opportunities for Cheesecake Factory and UNITEDHEALTH

0.04

Correlation Coefficient

Cheesecake Factory  UNITEDHEALTH

Significant diversification

The 3 months correlation between Cheesecake and UNITEDHEALTH is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and UNITEDHEALTH GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITEDHEALTH GROUP INC 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 UNITEDHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITEDHEALTH GROUP INC has no effect on the direction of Cheesecake Factory i.e., Cheesecake Factory and UNITEDHEALTH go up and down completely randomly.

Pair Corralation between Cheesecake Factory and UNITEDHEALTH

Given the investment horizon of 90 days The Cheesecake Factory is expected to generate about the same return on investment as UNITEDHEALTH GROUP INC. However, Cheesecake Factory is 2.36 times more volatile than UNITEDHEALTH GROUP INC. It trades about 0.05 of its potential returns per unit of risk. UNITEDHEALTH GROUP INC is currently producing about 0.13 per unit of risk. If you would invest  7,316  in UNITEDHEALTH GROUP INC on December 25, 2024 and sell it today you would earn a total of  516.00  from holding UNITEDHEALTH GROUP INC or generate 7.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.22%
Values	Daily Returns

The Cheesecake Factory  vs.  UNITEDHEALTH GROUP INC

The Cheesecake Factory

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Cheesecake Factory are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating forward-looking signals, Cheesecake Factory may actually be approaching a critical reversion point that can send shares even higher in April 2025.

UNITEDHEALTH GROUP INC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UNITEDHEALTH GROUP INC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, UNITEDHEALTH may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Cheesecake Factory and UNITEDHEALTH

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

The idea behind The Cheesecake Factory and UNITEDHEALTH GROUP INC 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.