Correlation Between 958102AR6 and Cheesecake Factory

Can any of the company-specific risk be diversified away by investing in both 958102AR6 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 958102AR6 and Cheesecake Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WDC 31 01 FEB 32 and The Cheesecake Factory, you can compare the effects of market volatilities on 958102AR6 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 958102AR6 with a short position of Cheesecake Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of 958102AR6 and Cheesecake Factory.

Diversification Opportunities for 958102AR6 and Cheesecake Factory

-0.44

Correlation Coefficient

958102AR6  Cheesecake Factory

Very good diversification

The 3 months correlation between 958102AR6 and Cheesecake is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding WDC 31 01 FEB 32 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 958102AR6 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 WDC 31 01 FEB 32 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 958102AR6 i.e., 958102AR6 and Cheesecake Factory go up and down completely randomly.

Pair Corralation between 958102AR6 and Cheesecake Factory

Assuming the 90 days trading horizon 958102AR6 is expected to generate 28.97 times less return on investment than Cheesecake Factory. But when comparing it to its historical volatility, WDC 31 01 FEB 32 is 2.21 times less risky than Cheesecake Factory. It trades about 0.0 of its potential returns per unit of risk. The Cheesecake Factory is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,188  in The Cheesecake Factory on September 25, 2024 and sell it today you would earn a total of  1,649  from holding The Cheesecake Factory or generate 51.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.15%
Values	Daily Returns

WDC 31 01 FEB 32  vs.  The Cheesecake Factory

WDC 31 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WDC 31 01 FEB 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady 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 WDC 31 01 FEB 32 investors.

The Cheesecake Factory

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Cheesecake Factory are ranked lower than 10 (%) 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 958102AR6 and Cheesecake Factory

The main advantage of trading using opposite 958102AR6 and Cheesecake Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 958102AR6 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 WDC 31 01 FEB 32 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.