Correlation Between Cheesecake Factory and Albertsons Companies

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

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

Diversification Opportunities for Cheesecake Factory and Albertsons Companies

-0.54

Correlation Coefficient

Cheesecake Factory  Albertsons Companies

Excellent diversification

The 3 months correlation between Cheesecake and Albertsons is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and Albertsons Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albertsons Companies and Cheesecake Factory 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 The Cheesecake Factory are associated (or correlated) with Albertsons Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albertsons Companies has no effect on the direction of Cheesecake Factory i.e., Cheesecake Factory and Albertsons Companies go up and down completely randomly.

Pair Corralation between Cheesecake Factory and Albertsons Companies

Given the investment horizon of 90 days The Cheesecake Factory is expected to generate 1.41 times more return on investment than Albertsons Companies. However, Cheesecake Factory is 1.41 times more volatile than Albertsons Companies. It trades about 0.17 of its potential returns per unit of risk. Albertsons Companies is currently generating about -0.09 per unit of risk. If you would invest  5,015  in The Cheesecake Factory on May 5, 2025 and sell it today you would earn a total of  1,223  from holding The Cheesecake Factory or generate 24.39% return on investment over 90 days.

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

The Cheesecake Factory  vs.  Albertsons Companies

The Cheesecake Factory

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Cheesecake Factory are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent forward-looking signals, Cheesecake Factory exhibited solid returns over the last few months and may actually be approaching a breakup point.

Albertsons Companies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Albertsons Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Cheesecake Factory and Albertsons Companies

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

The idea behind The Cheesecake Factory and Albertsons Companies 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.