Correlation Between TEXAS ROADHOUSE and OPKO HEALTH

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

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

Diversification Opportunities for TEXAS ROADHOUSE and OPKO HEALTH

0.75

Correlation Coefficient

TEXAS ROADHOUSE  OPKO HEALTH

Poor diversification

The 3 months correlation between TEXAS and OPKO is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding TEXAS ROADHOUSE and OPKO HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPKO HEALTH 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 OPKO HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPKO HEALTH has no effect on the direction of TEXAS ROADHOUSE i.e., TEXAS ROADHOUSE and OPKO HEALTH go up and down completely randomly.

Pair Corralation between TEXAS ROADHOUSE and OPKO HEALTH

Assuming the 90 days trading horizon TEXAS ROADHOUSE is expected to generate 0.56 times more return on investment than OPKO HEALTH. However, TEXAS ROADHOUSE is 1.78 times less risky than OPKO HEALTH. It trades about 0.09 of its potential returns per unit of risk. OPKO HEALTH is currently generating about 0.03 per unit of risk. If you would invest  8,942  in TEXAS ROADHOUSE on October 24, 2024 and sell it today you would earn a total of  8,378  from holding TEXAS ROADHOUSE or generate 93.69% return on investment over 90 days.

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

TEXAS ROADHOUSE  vs.  OPKO HEALTH

TEXAS ROADHOUSE

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TEXAS ROADHOUSE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

OPKO HEALTH

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in OPKO HEALTH are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, OPKO HEALTH may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with TEXAS ROADHOUSE and OPKO HEALTH

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

The idea behind TEXAS ROADHOUSE and OPKO HEALTH 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.