Correlation Between Cracker Barrel and SolarBank

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

Diversification Opportunities for Cracker Barrel and SolarBank

-0.41

Correlation Coefficient

Cracker Barrel  SolarBank

Very good diversification

The 3 months correlation between Cracker and SolarBank is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Cracker Barrel Old and SolarBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolarBank 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 SolarBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolarBank has no effect on the direction of Cracker Barrel i.e., Cracker Barrel and SolarBank go up and down completely randomly.

Pair Corralation between Cracker Barrel and SolarBank

If you would invest  3,793  in Cracker Barrel Old on September 5, 2024 and sell it today you would earn a total of  1,778  from holding Cracker Barrel Old or generate 46.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Cracker Barrel Old  vs.  SolarBank

Cracker Barrel Old

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cracker Barrel Old are ranked lower than 15 (%) 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.

SolarBank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SolarBank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, SolarBank is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cracker Barrel and SolarBank

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

The idea behind Cracker Barrel Old and SolarBank 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.