Correlation Between Falcons Beyond and Texas Roadhouse

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

By analyzing existing cross correlation between Falcons Beyond Global, and Texas Roadhouse, you can compare the effects of market volatilities on Falcons Beyond 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 Falcons Beyond with a short position of Texas Roadhouse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcons Beyond and Texas Roadhouse.

Diversification Opportunities for Falcons Beyond and Texas Roadhouse

-0.62

Correlation Coefficient

Falcons Beyond  Texas Roadhouse

Excellent diversification

The 3 months correlation between Falcons and Texas is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Falcons Beyond Global, and Texas Roadhouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Roadhouse and Falcons Beyond 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 Falcons Beyond Global, 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 Falcons Beyond i.e., Falcons Beyond and Texas Roadhouse go up and down completely randomly.

Pair Corralation between Falcons Beyond and Texas Roadhouse

Assuming the 90 days horizon Falcons Beyond Global, is expected to generate 8.99 times more return on investment than Texas Roadhouse. However, Falcons Beyond is 8.99 times more volatile than Texas Roadhouse. It trades about 0.05 of its potential returns per unit of risk. Texas Roadhouse is currently generating about 0.16 per unit of risk. If you would invest  123.00  in Falcons Beyond Global, on September 13, 2024 and sell it today you would lose (24.00) from holding Falcons Beyond Global, or give up 19.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	87.3%
Values	Daily Returns

Falcons Beyond Global,  vs.  Texas Roadhouse

Falcons Beyond Global,

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Falcons Beyond Global, are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting fundamental indicators, Falcons Beyond showed solid returns over the last few months and may actually be approaching a breakup point.

Texas Roadhouse

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Texas Roadhouse are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Texas Roadhouse demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Falcons Beyond and Texas Roadhouse

The main advantage of trading using opposite Falcons Beyond and Texas Roadhouse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcons Beyond 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 Falcons Beyond Global, 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.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.