Correlation Between Texas Roadhouse and Corporate Travel

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

By analyzing existing cross correlation between Texas Roadhouse and Corporate Travel Management, you can compare the effects of market volatilities on Texas Roadhouse and Corporate Travel 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 Corporate Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Texas Roadhouse and Corporate Travel.

Diversification Opportunities for Texas Roadhouse and Corporate Travel

-0.1

Correlation Coefficient

Texas Roadhouse  Corporate Travel

Good diversification

The 3 months correlation between Texas and Corporate is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Texas Roadhouse and Corporate Travel Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Travel Man 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 Corporate Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Travel Man has no effect on the direction of Texas Roadhouse i.e., Texas Roadhouse and Corporate Travel go up and down completely randomly.

Pair Corralation between Texas Roadhouse and Corporate Travel

Assuming the 90 days horizon Texas Roadhouse is expected to under-perform the Corporate Travel. But the stock apears to be less risky and, when comparing its historical volatility, Texas Roadhouse is 1.41 times less risky than Corporate Travel. The stock trades about -0.05 of its potential returns per unit of risk. The Corporate Travel Management is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  765.00  in Corporate Travel Management on December 30, 2024 and sell it today you would earn a total of  50.00  from holding Corporate Travel Management or generate 6.54% return on investment over 90 days.

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

Texas Roadhouse  vs.  Corporate Travel Management

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. Despite nearly stable basic indicators, Texas Roadhouse is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Corporate Travel Man

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Corporate Travel Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Corporate Travel may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Texas Roadhouse and Corporate Travel

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

The idea behind Texas Roadhouse and Corporate Travel Management 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.