Correlation Between Cannae Holdings and Cracker Barrel

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

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

Diversification Opportunities for Cannae Holdings and Cracker Barrel

0.65

Correlation Coefficient

Cannae Holdings  Cracker Barrel

Poor diversification

The 3 months correlation between Cannae and Cracker is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cannae Holdings 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 Cannae Holdings 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 Cannae Holdings 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 Cannae Holdings i.e., Cannae Holdings and Cracker Barrel go up and down completely randomly.

Pair Corralation between Cannae Holdings and Cracker Barrel

Given the investment horizon of 90 days Cannae Holdings is expected to generate 5.87 times less return on investment than Cracker Barrel. But when comparing it to its historical volatility, Cannae Holdings is 2.11 times less risky than Cracker Barrel. It trades about 0.05 of its potential returns per unit of risk. Cracker Barrel Old is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  4,068  in Cracker Barrel Old on September 21, 2024 and sell it today you would earn a total of  1,145  from holding Cracker Barrel Old or generate 28.15% return on investment over 90 days.

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

Cannae Holdings  vs.  Cracker Barrel Old

Cannae Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cannae Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Cannae Holdings is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Cracker Barrel Old

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cracker Barrel Old are ranked lower than 10 (%) 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.

Pair Trading with Cannae Holdings and Cracker Barrel

The main advantage of trading using opposite Cannae Holdings and Cracker Barrel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cannae Holdings 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 Cannae Holdings 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.