Correlation Between Cracker Barrel and Aquestive Therapeutics

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

Diversification Opportunities for Cracker Barrel and Aquestive Therapeutics

-0.43

Correlation Coefficient

Cracker Barrel  Aquestive Therapeutics

Very good diversification

The 3 months correlation between Cracker and Aquestive is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Cracker Barrel Old and Aquestive Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquestive Therapeutics 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 Aquestive Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquestive Therapeutics has no effect on the direction of Cracker Barrel i.e., Cracker Barrel and Aquestive Therapeutics go up and down completely randomly.

Pair Corralation between Cracker Barrel and Aquestive Therapeutics

Given the investment horizon of 90 days Cracker Barrel Old is expected to generate 0.63 times more return on investment than Aquestive Therapeutics. However, Cracker Barrel Old is 1.58 times less risky than Aquestive Therapeutics. It trades about 0.08 of its potential returns per unit of risk. Aquestive Therapeutics is currently generating about -0.32 per unit of risk. If you would invest  5,195  in Cracker Barrel Old on September 25, 2024 and sell it today you would earn a total of  190.50  from holding Cracker Barrel Old or generate 3.67% return on investment over 90 days.

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

Cracker Barrel Old  vs.  Aquestive Therapeutics

Cracker Barrel Old

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cracker Barrel Old are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Cracker Barrel disclosed solid returns over the last few months and may actually be approaching a breakup point.

Aquestive Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquestive Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Cracker Barrel and Aquestive Therapeutics

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

The idea behind Cracker Barrel Old and Aquestive Therapeutics 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.