Correlation Between Sweetgreen and Cracker Barrel

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

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

Diversification Opportunities for Sweetgreen and Cracker Barrel

0.26

Correlation Coefficient

Sweetgreen  Cracker Barrel

Modest diversification

The 3 months correlation between Sweetgreen and Cracker is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen 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 Sweetgreen 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 Sweetgreen 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 Sweetgreen i.e., Sweetgreen and Cracker Barrel go up and down completely randomly.

Pair Corralation between Sweetgreen and Cracker Barrel

Allowing for the 90-day total investment horizon Sweetgreen is expected to generate 8.71 times less return on investment than Cracker Barrel. In addition to that, Sweetgreen is 1.29 times more volatile than Cracker Barrel Old. It trades about 0.01 of its total potential returns per unit of risk. Cracker Barrel Old is currently generating about 0.14 per unit of volatility. If you would invest  4,068  in Cracker Barrel Old on September 23, 2024 and sell it today you would earn a total of  1,272  from holding Cracker Barrel Old or generate 31.27% return on investment over 90 days.

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

Sweetgreen  vs.  Cracker Barrel Old

Sweetgreen

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sweetgreen are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Sweetgreen is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Cracker Barrel Old

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cracker Barrel Old are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Cracker Barrel disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sweetgreen and Cracker Barrel

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

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.