Correlation Between AMGEN and Cheesecake Factory

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

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

Diversification Opportunities for AMGEN and Cheesecake Factory

-0.7

Correlation Coefficient

AMGEN  Cheesecake Factory

Excellent diversification

The 3 months correlation between AMGEN and Cheesecake is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding AMGEN INC 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 AMGEN 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 AMGEN INC 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 AMGEN i.e., AMGEN and Cheesecake Factory go up and down completely randomly.

Pair Corralation between AMGEN and Cheesecake Factory

Assuming the 90 days trading horizon AMGEN INC is expected to under-perform the Cheesecake Factory. But the bond apears to be less risky and, when comparing its historical volatility, AMGEN INC is 3.67 times less risky than Cheesecake Factory. The bond trades about -0.18 of its potential returns per unit of risk. The The Cheesecake Factory is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  3,737  in The Cheesecake Factory on September 14, 2024 and sell it today you would earn a total of  1,259  from holding The Cheesecake Factory or generate 33.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

AMGEN INC  vs.  The Cheesecake Factory

AMGEN INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMGEN INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for AMGEN INC investors.

The Cheesecake Factory

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Cheesecake Factory are ranked lower than 16 (%) 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 AMGEN and Cheesecake Factory

The main advantage of trading using opposite AMGEN and Cheesecake Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMGEN 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 AMGEN INC 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.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.