Correlation Between Juniata Valley and Cheesecake Factory

Can any of the company-specific risk be diversified away by investing in both Juniata Valley and Cheesecake Factory 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 Juniata Valley and Cheesecake Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Juniata Valley Financial and The Cheesecake Factory, you can compare the effects of market volatilities on Juniata Valley and Cheesecake Factory 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 Juniata Valley with a short position of Cheesecake Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Juniata Valley and Cheesecake Factory.

Diversification Opportunities for Juniata Valley and Cheesecake Factory

0.87

Correlation Coefficient

Juniata Valley  Cheesecake Factory

Very poor diversification

The 3 months correlation between Juniata and Cheesecake is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Juniata Valley Financial and The Cheesecake Factory in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Cheesecake Factory and Juniata Valley 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 Juniata Valley Financial are associated (or correlated) with Cheesecake Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Cheesecake Factory has no effect on the direction of Juniata Valley i.e., Juniata Valley and Cheesecake Factory go up and down completely randomly.

Pair Corralation between Juniata Valley and Cheesecake Factory

Given the investment horizon of 90 days Juniata Valley Financial is expected to under-perform the Cheesecake Factory. But the otc stock apears to be less risky and, when comparing its historical volatility, Juniata Valley Financial is 1.45 times less risky than Cheesecake Factory. The otc stock trades about -0.13 of its potential returns per unit of risk. The The Cheesecake Factory is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  5,078  in The Cheesecake Factory on October 11, 2024 and sell it today you would lose (105.00) from holding The Cheesecake Factory or give up 2.07% of portfolio value over 90 days.

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

Juniata Valley Financial  vs.  The Cheesecake Factory

Juniata Valley Financial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Juniata Valley Financial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Juniata Valley may actually be approaching a critical reversion point that can send shares even higher in February 2025.

The Cheesecake Factory

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Cheesecake Factory are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating forward-looking signals, Cheesecake Factory exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Juniata Valley and Cheesecake Factory

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

The idea behind Juniata Valley Financial and The Cheesecake Factory 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.