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

0.69

Correlation Coefficient

TEXAS ROADHOUSE  NTG Nordic

Poor diversification

The 3 months correlation between TEXAS and NTG is 0.69. 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 generate 0.63 times more return on investment than NTG Nordic. However, TEXAS ROADHOUSE is 1.58 times less risky than NTG Nordic. It trades about 0.09 of its potential returns per unit of risk. NTG Nordic Transport is currently generating about -0.01 per unit of risk. If you would invest  9,437  in TEXAS ROADHOUSE on December 4, 2024 and sell it today you would earn a total of  8,218  from holding TEXAS ROADHOUSE or generate 87.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

NTG Nordic Transport

Risk-Adjusted Performance

Very Weak

Over the last 90 days NTG Nordic Transport 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 nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..