Correlation Between CENTURIA OFFICE and TEXAS ROADHOUSE

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

By analyzing existing cross correlation between CENTURIA OFFICE REIT and TEXAS ROADHOUSE, you can compare the effects of market volatilities on CENTURIA OFFICE and TEXAS ROADHOUSE 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 CENTURIA OFFICE with a short position of TEXAS ROADHOUSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of CENTURIA OFFICE and TEXAS ROADHOUSE.

Diversification Opportunities for CENTURIA OFFICE and TEXAS ROADHOUSE

0.11

Correlation Coefficient

CENTURIA OFFICE  TEXAS ROADHOUSE

Average diversification

The 3 months correlation between CENTURIA and TEXAS is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding CENTURIA OFFICE REIT and TEXAS ROADHOUSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TEXAS ROADHOUSE and CENTURIA OFFICE 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 CENTURIA OFFICE REIT are associated (or correlated) with TEXAS ROADHOUSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TEXAS ROADHOUSE has no effect on the direction of CENTURIA OFFICE i.e., CENTURIA OFFICE and TEXAS ROADHOUSE go up and down completely randomly.

Pair Corralation between CENTURIA OFFICE and TEXAS ROADHOUSE

Assuming the 90 days horizon CENTURIA OFFICE REIT is expected to generate 1.17 times more return on investment than TEXAS ROADHOUSE. However, CENTURIA OFFICE is 1.17 times more volatile than TEXAS ROADHOUSE. It trades about 0.09 of its potential returns per unit of risk. TEXAS ROADHOUSE is currently generating about -0.05 per unit of risk. If you would invest  58.00  in CENTURIA OFFICE REIT on December 30, 2024 and sell it today you would earn a total of  6.00  from holding CENTURIA OFFICE REIT or generate 10.34% return on investment over 90 days.

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

CENTURIA OFFICE REIT  vs.  TEXAS ROADHOUSE

CENTURIA OFFICE REIT

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CENTURIA OFFICE REIT are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CENTURIA OFFICE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

TEXAS ROADHOUSE

Risk-Adjusted Performance

Very Weak

Over the last 90 days TEXAS ROADHOUSE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, TEXAS ROADHOUSE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CENTURIA OFFICE and TEXAS ROADHOUSE

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

The idea behind CENTURIA OFFICE REIT and TEXAS ROADHOUSE 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.