Correlation Between Expeditors International and TEXAS ROADHOUSE

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

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

Diversification Opportunities for Expeditors International and TEXAS ROADHOUSE

0.16

Correlation Coefficient

Expeditors International  TEXAS ROADHOUSE

Average diversification

The 3 months correlation between Expeditors and TEXAS is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Expeditors International of and TEXAS ROADHOUSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TEXAS ROADHOUSE and Expeditors International 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 Expeditors International of 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 Expeditors International i.e., Expeditors International and TEXAS ROADHOUSE go up and down completely randomly.

Pair Corralation between Expeditors International and TEXAS ROADHOUSE

Assuming the 90 days trading horizon Expeditors International of is expected to generate 0.99 times more return on investment than TEXAS ROADHOUSE. However, Expeditors International of is 1.01 times less risky than TEXAS ROADHOUSE. It trades about 0.01 of its potential returns per unit of risk. TEXAS ROADHOUSE is currently generating about -0.09 per unit of risk. If you would invest  10,585  in Expeditors International of on December 22, 2024 and sell it today you would earn a total of  65.00  from holding Expeditors International of or generate 0.61% return on investment over 90 days.

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

Expeditors International of  vs.  TEXAS ROADHOUSE

Expeditors International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Expeditors International of are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Expeditors International is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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 latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Expeditors International and TEXAS ROADHOUSE

The main advantage of trading using opposite Expeditors International and TEXAS ROADHOUSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Expeditors International 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 Expeditors International of 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.