Correlation Between Cracker Barrel and AMCON Distributing

Can any of the company-specific risk be diversified away by investing in both Cracker Barrel and AMCON Distributing 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 Cracker Barrel and AMCON Distributing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cracker Barrel Old and AMCON Distributing, you can compare the effects of market volatilities on Cracker Barrel and AMCON Distributing 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 Cracker Barrel with a short position of AMCON Distributing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cracker Barrel and AMCON Distributing.

Diversification Opportunities for Cracker Barrel and AMCON Distributing

-0.08

Correlation Coefficient

Cracker Barrel  AMCON Distributing

Good diversification

The 3 months correlation between Cracker and AMCON is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Cracker Barrel Old and AMCON Distributing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMCON Distributing and Cracker Barrel 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 Cracker Barrel Old are associated (or correlated) with AMCON Distributing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMCON Distributing has no effect on the direction of Cracker Barrel i.e., Cracker Barrel and AMCON Distributing go up and down completely randomly.

Pair Corralation between Cracker Barrel and AMCON Distributing

Given the investment horizon of 90 days Cracker Barrel is expected to generate 1.29 times less return on investment than AMCON Distributing. But when comparing it to its historical volatility, Cracker Barrel Old is 1.1 times less risky than AMCON Distributing. It trades about 0.16 of its potential returns per unit of risk. AMCON Distributing is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  11,982  in AMCON Distributing on September 18, 2024 and sell it today you would earn a total of  1,618  from holding AMCON Distributing or generate 13.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cracker Barrel Old  vs.  AMCON Distributing

Cracker Barrel Old

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cracker Barrel Old are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Cracker Barrel disclosed solid returns over the last few months and may actually be approaching a breakup point.

AMCON Distributing

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AMCON Distributing are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, AMCON Distributing is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cracker Barrel and AMCON Distributing

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

The idea behind Cracker Barrel Old and AMCON Distributing 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.