Correlation Between Yum Brands and Cracker Barrel
Can any of the company-specific risk be diversified away by investing in both Yum Brands 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 Yum Brands and Cracker Barrel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yum Brands and Cracker Barrel Old, you can compare the effects of market volatilities on Yum Brands 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 Yum Brands with a short position of Cracker Barrel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yum Brands and Cracker Barrel.
Diversification Opportunities for Yum Brands and Cracker Barrel
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Yum and Cracker is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Yum Brands 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 Yum Brands 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 Yum Brands 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 Yum Brands i.e., Yum Brands and Cracker Barrel go up and down completely randomly.
Pair Corralation between Yum Brands and Cracker Barrel
Considering the 90-day investment horizon Yum Brands is expected to generate 47.22 times less return on investment than Cracker Barrel. But when comparing it to its historical volatility, Yum Brands is 3.5 times less risky than Cracker Barrel. It trades about 0.02 of its potential returns per unit of risk. Cracker Barrel Old is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 4,318 in Cracker Barrel Old on April 25, 2025 and sell it today you would earn a total of 2,868 from holding Cracker Barrel Old or generate 66.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yum Brands vs. Cracker Barrel Old
Performance |
| Timeline |
| Yum Brands |
| Cracker Barrel Old |
Yum Brands and Cracker Barrel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yum Brands and Cracker Barrel
The main advantage of trading using opposite Yum Brands and Cracker Barrel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yum Brands 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.| Yum Brands vs. Nuvalent | Yum Brands vs. Merck Company | Yum Brands vs. Amylyx Pharmaceuticals | Yum Brands vs. Alcoa Corp |
| Cracker Barrel vs. The Cheesecake Factory | Cracker Barrel vs. Darden Restaurants | Cracker Barrel vs. Brinker International | Cracker Barrel vs. Texas Roadhouse |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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