Correlation Between Cracker Barrel and BJs Restaurants

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

Diversification Opportunities for Cracker Barrel and BJs Restaurants

0.93

Correlation Coefficient

Cracker Barrel  BJs Restaurants

Almost no diversification

The 3 months correlation between Cracker and BJs is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Cracker Barrel Old and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants 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 BJs Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Restaurants has no effect on the direction of Cracker Barrel i.e., Cracker Barrel and BJs Restaurants go up and down completely randomly.

Pair Corralation between Cracker Barrel and BJs Restaurants

Given the investment horizon of 90 days Cracker Barrel Old is expected to generate 1.11 times more return on investment than BJs Restaurants. However, Cracker Barrel is 1.11 times more volatile than BJs Restaurants. It trades about 0.1 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.03 per unit of risk. If you would invest  4,951  in Cracker Barrel Old on August 31, 2024 and sell it today you would earn a total of  325.00  from holding Cracker Barrel Old or generate 6.56% return on investment over 90 days.

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

Cracker Barrel Old  vs.  BJs Restaurants

Cracker Barrel Old

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cracker Barrel Old are ranked lower than 13 (%) 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.

BJs Restaurants

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, BJs Restaurants demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cracker Barrel and BJs Restaurants

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

The idea behind Cracker Barrel Old and BJs Restaurants 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 CEOs Directory module to screen CEOs from public companies around the world.