Correlation Between Primo Brands and Cracker Barrel

Can any of the company-specific risk be diversified away by investing in both Primo Brands and Cracker Barrel 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 Primo Brands and Cracker Barrel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Primo Brands and Cracker Barrel Old, you can compare the effects of market volatilities on Primo Brands and Cracker Barrel 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 Primo Brands with a short position of Cracker Barrel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primo Brands and Cracker Barrel.

Diversification Opportunities for Primo Brands and Cracker Barrel

-0.02

Correlation Coefficient

Primo Brands  Cracker Barrel

Good diversification

The 3 months correlation between Primo and Cracker is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Primo Brands and Cracker Barrel Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cracker Barrel Old and Primo Brands 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 Primo Brands are associated (or correlated) with Cracker Barrel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cracker Barrel Old has no effect on the direction of Primo Brands i.e., Primo Brands and Cracker Barrel go up and down completely randomly.

Pair Corralation between Primo Brands and Cracker Barrel

Given the investment horizon of 90 days Primo Brands is expected to generate 0.44 times more return on investment than Cracker Barrel. However, Primo Brands is 2.26 times less risky than Cracker Barrel. It trades about 0.06 of its potential returns per unit of risk. Cracker Barrel Old is currently generating about -0.09 per unit of risk. If you would invest  3,090  in Primo Brands on December 21, 2024 and sell it today you would earn a total of  150.00  from holding Primo Brands or generate 4.85% return on investment over 90 days.

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

Primo Brands  vs.  Cracker Barrel Old

Primo Brands

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Primo Brands are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Primo Brands is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Primo Brands and Cracker Barrel

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

The idea behind Primo Brands and Cracker Barrel Old 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.