Correlation Between TEXAS ROADHOUSE and YAMAHA MOTOR

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

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

Diversification Opportunities for TEXAS ROADHOUSE and YAMAHA MOTOR

0.25

Correlation Coefficient

TEXAS ROADHOUSE  YAMAHA MOTOR

Modest diversification

The 3 months correlation between TEXAS and YAMAHA is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding TEXAS ROADHOUSE and YAMAHA MOTOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YAMAHA MOTOR 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 YAMAHA MOTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YAMAHA MOTOR has no effect on the direction of TEXAS ROADHOUSE i.e., TEXAS ROADHOUSE and YAMAHA MOTOR go up and down completely randomly.

Pair Corralation between TEXAS ROADHOUSE and YAMAHA MOTOR

Assuming the 90 days trading horizon TEXAS ROADHOUSE is expected to generate 0.85 times more return on investment than YAMAHA MOTOR. However, TEXAS ROADHOUSE is 1.18 times less risky than YAMAHA MOTOR. It trades about -0.13 of its potential returns per unit of risk. YAMAHA MOTOR is currently generating about -0.13 per unit of risk. If you would invest  18,050  in TEXAS ROADHOUSE on October 11, 2024 and sell it today you would lose (510.00) from holding TEXAS ROADHOUSE or give up 2.83% of portfolio value over 90 days.

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

TEXAS ROADHOUSE  vs.  YAMAHA MOTOR

TEXAS ROADHOUSE

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TEXAS ROADHOUSE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, TEXAS ROADHOUSE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

YAMAHA MOTOR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in YAMAHA MOTOR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, YAMAHA MOTOR is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with TEXAS ROADHOUSE and YAMAHA MOTOR

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

The idea behind TEXAS ROADHOUSE and YAMAHA MOTOR 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.