Correlation Between TEXAS ROADHOUSE and NTG Nordic

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

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

Diversification Opportunities for TEXAS ROADHOUSE and NTG Nordic

-0.45

Correlation Coefficient

TEXAS ROADHOUSE  NTG Nordic

Very good diversification

The 3 months correlation between TEXAS and NTG is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding TEXAS ROADHOUSE and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport and TEXAS ROADHOUSE 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 TEXAS ROADHOUSE are associated (or correlated) with NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of TEXAS ROADHOUSE i.e., TEXAS ROADHOUSE and NTG Nordic go up and down completely randomly.

Pair Corralation between TEXAS ROADHOUSE and NTG Nordic

Assuming the 90 days trading horizon TEXAS ROADHOUSE is expected to under-perform the NTG Nordic. But the stock apears to be less risky and, when comparing its historical volatility, TEXAS ROADHOUSE is 1.1 times less risky than NTG Nordic. The stock trades about -0.05 of its potential returns per unit of risk. The NTG Nordic Transport is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,435  in NTG Nordic Transport on December 28, 2024 and sell it today you would earn a total of  245.00  from holding NTG Nordic Transport or generate 7.13% return on investment over 90 days.

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

TEXAS ROADHOUSE  vs.  NTG Nordic Transport

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.

NTG Nordic Transport

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NTG Nordic Transport are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NTG Nordic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with TEXAS ROADHOUSE and NTG Nordic

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

The idea behind TEXAS ROADHOUSE and NTG Nordic Transport 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.