Correlation Between Cracker Barrel and Playtika Holding

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

Diversification Opportunities for Cracker Barrel and Playtika Holding

-0.19

Correlation Coefficient

Cracker Barrel  Playtika Holding

Good diversification

The 3 months correlation between Cracker and Playtika is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Cracker Barrel Old and Playtika Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtika Holding Corp 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 Playtika Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtika Holding Corp has no effect on the direction of Cracker Barrel i.e., Cracker Barrel and Playtika Holding go up and down completely randomly.

Pair Corralation between Cracker Barrel and Playtika Holding

Given the investment horizon of 90 days Cracker Barrel Old is expected to generate 1.7 times more return on investment than Playtika Holding. However, Cracker Barrel is 1.7 times more volatile than Playtika Holding Corp. It trades about 0.11 of its potential returns per unit of risk. Playtika Holding Corp is currently generating about -0.01 per unit of risk. If you would invest  3,871  in Cracker Barrel Old on October 7, 2024 and sell it today you would earn a total of  1,723  from holding Cracker Barrel Old or generate 44.51% 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.  Playtika Holding Corp

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 fragile basic indicators, Cracker Barrel disclosed solid returns over the last few months and may actually be approaching a breakup point.

Playtika Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Playtika Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Cracker Barrel and Playtika Holding

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

The idea behind Cracker Barrel Old and Playtika Holding Corp 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.