Correlation Between Cracker Barrel and NH Foods

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

Diversification Opportunities for Cracker Barrel and NH Foods

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Cracker and NIPMY is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cracker Barrel Old and NH Foods Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH Foods 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 NH Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH Foods has no effect on the direction of Cracker Barrel i.e., Cracker Barrel and NH Foods go up and down completely randomly.

Pair Corralation between Cracker Barrel and NH Foods

If you would invest  4,842  in Cracker Barrel Old on September 19, 2024 and sell it today you would earn a total of  479.00  from holding Cracker Barrel Old or generate 9.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Cracker Barrel Old  vs.  NH Foods Ltd

 Performance 
       Timeline  
Cracker Barrel Old 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Cracker Barrel Old are ranked lower than 11 (%) 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.
NH Foods 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NH Foods Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, NH Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cracker Barrel and NH Foods Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cracker Barrel and NH Foods

The main advantage of trading using opposite Cracker Barrel and NH Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cracker Barrel position performs unexpectedly, NH Foods 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 NH Foods will offset losses from the drop in NH Foods' long position.
The idea behind Cracker Barrel Old and NH Foods Ltd 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.
Check out your portfolio center.
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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