Correlation Between Highest Performances and Texas Roadhouse

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

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

Diversification Opportunities for Highest Performances and Texas Roadhouse

-0.13

Correlation Coefficient

Highest Performances  Texas Roadhouse

Good diversification

The 3 months correlation between Highest and Texas is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Highest Performances Holdings and Texas Roadhouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Roadhouse and Highest Performances 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 Highest Performances Holdings 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 Highest Performances i.e., Highest Performances and Texas Roadhouse go up and down completely randomly.

Pair Corralation between Highest Performances and Texas Roadhouse

Considering the 90-day investment horizon Highest Performances Holdings is expected to under-perform the Texas Roadhouse. In addition to that, Highest Performances is 10.15 times more volatile than Texas Roadhouse. It trades about -0.03 of its total potential returns per unit of risk. Texas Roadhouse is currently generating about -0.18 per unit of volatility. If you would invest  18,254  in Texas Roadhouse on October 26, 2024 and sell it today you would lose (608.00) from holding Texas Roadhouse or give up 3.33% of portfolio value over 90 days.

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

Highest Performances Holdings  vs.  Texas Roadhouse

Highest Performances

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Highest Performances Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Texas Roadhouse

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Texas Roadhouse has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Texas Roadhouse is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Highest Performances and Texas Roadhouse

The main advantage of trading using opposite Highest Performances and Texas Roadhouse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highest Performances 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 Highest Performances Holdings 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.