Correlation Between Cracker Barrel and Arconic

Can any of the company-specific risk be diversified away by investing in both Cracker Barrel and Arconic 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 Arconic 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 Arconic 59 percent, you can compare the effects of market volatilities on Cracker Barrel and Arconic 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 Arconic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cracker Barrel and Arconic.

Diversification Opportunities for Cracker Barrel and Arconic

-0.29

Correlation Coefficient

Cracker Barrel  Arconic

Very good diversification

The 3 months correlation between Cracker and Arconic is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Cracker Barrel Old and Arconic 59 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arconic 59 percent 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 Arconic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arconic 59 percent has no effect on the direction of Cracker Barrel i.e., Cracker Barrel and Arconic go up and down completely randomly.

Pair Corralation between Cracker Barrel and Arconic

Given the investment horizon of 90 days Cracker Barrel Old is expected to under-perform the Arconic. In addition to that, Cracker Barrel is 9.46 times more volatile than Arconic 59 percent. It trades about -0.11 of its total potential returns per unit of risk. Arconic 59 percent is currently generating about -0.04 per unit of volatility. If you would invest  10,199  in Arconic 59 percent on December 24, 2024 and sell it today you would lose (114.00) from holding Arconic 59 percent or give up 1.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Cracker Barrel Old  vs.  Arconic 59 percent

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.

Arconic 59 percent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arconic 59 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Arconic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cracker Barrel and Arconic

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

The idea behind Cracker Barrel Old and Arconic 59 percent 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.