Correlation Between KEYBANK and Cheesecake Factory

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

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

Diversification Opportunities for KEYBANK and Cheesecake Factory

0.18

Correlation Coefficient

KEYBANK  Cheesecake Factory

Average diversification

The 3 months correlation between KEYBANK and Cheesecake is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding KEYBANK NATL ASSN 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 KEYBANK 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 KEYBANK NATL ASSN 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 KEYBANK i.e., KEYBANK and Cheesecake Factory go up and down completely randomly.

Pair Corralation between KEYBANK and Cheesecake Factory

Assuming the 90 days trading horizon KEYBANK NATL ASSN is expected to under-perform the Cheesecake Factory. In addition to that, KEYBANK is 1.1 times more volatile than The Cheesecake Factory. It trades about -0.4 of its total potential returns per unit of risk. The Cheesecake Factory is currently generating about -0.02 per unit of volatility. If you would invest  4,877  in The Cheesecake Factory on September 26, 2024 and sell it today you would lose (70.00) from holding The Cheesecake Factory or give up 1.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	47.62%
Values	Daily Returns

KEYBANK NATL ASSN  vs.  The Cheesecake Factory

KEYBANK NATL ASSN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEYBANK NATL ASSN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for KEYBANK NATL ASSN investors.

The Cheesecake Factory

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Cheesecake Factory are ranked lower than 8 (%) 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 KEYBANK and Cheesecake Factory

The main advantage of trading using opposite KEYBANK and Cheesecake Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KEYBANK 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 KEYBANK NATL ASSN 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.