Correlation Between Cracker Barrel and New Horizon

Can any of the company-specific risk be diversified away by investing in both Cracker Barrel and New Horizon 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 New Horizon 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 New Horizon Aircraft, you can compare the effects of market volatilities on Cracker Barrel and New Horizon 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 New Horizon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cracker Barrel and New Horizon.

Diversification Opportunities for Cracker Barrel and New Horizon

0.56

Correlation Coefficient

Cracker Barrel  New Horizon

Very weak diversification

The 3 months correlation between Cracker and New is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Cracker Barrel Old and New Horizon Aircraft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Horizon Aircraft 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 New Horizon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Horizon Aircraft has no effect on the direction of Cracker Barrel i.e., Cracker Barrel and New Horizon go up and down completely randomly.

Pair Corralation between Cracker Barrel and New Horizon

Given the investment horizon of 90 days Cracker Barrel Old is expected to generate 0.56 times more return on investment than New Horizon. However, Cracker Barrel Old is 1.79 times less risky than New Horizon. It trades about -0.13 of its potential returns per unit of risk. New Horizon Aircraft is currently generating about -0.15 per unit of risk. If you would invest  5,664  in Cracker Barrel Old on December 25, 2024 and sell it today you would lose (1,562) from holding Cracker Barrel Old or give up 27.58% of portfolio value over 90 days.

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

Cracker Barrel Old  vs.  New Horizon Aircraft

Cracker Barrel Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cracker Barrel Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

New Horizon Aircraft

Risk-Adjusted Performance

Very Weak

Over the last 90 days New Horizon Aircraft has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Cracker Barrel and New Horizon

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

The idea behind Cracker Barrel Old and New Horizon Aircraft 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.