Correlation Between Cracker Barrel and Safety Shot

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

Diversification Opportunities for Cracker Barrel and Safety Shot

-0.73

Correlation Coefficient

Cracker Barrel  Safety Shot

Pay attention - limited upside

The 3 months correlation between Cracker and Safety is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Cracker Barrel Old and Safety Shot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Shot 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 Safety Shot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Shot has no effect on the direction of Cracker Barrel i.e., Cracker Barrel and Safety Shot go up and down completely randomly.

Pair Corralation between Cracker Barrel and Safety Shot

Given the investment horizon of 90 days Cracker Barrel Old is expected to under-perform the Safety Shot. But the stock apears to be less risky and, when comparing its historical volatility, Cracker Barrel Old is 2.82 times less risky than Safety Shot. The stock trades about -0.04 of its potential returns per unit of risk. The Safety Shot is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  65.00  in Safety Shot on September 27, 2024 and sell it today you would earn a total of  10.60  from holding Safety Shot or generate 16.31% return on investment over 90 days.

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

Cracker Barrel Old  vs.  Safety Shot

Cracker Barrel Old

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cracker Barrel Old are ranked lower than 7 (%) 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.

Safety Shot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safety Shot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Cracker Barrel and Safety Shot

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

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