Correlation Between Texas Roadhouse and FISH PAYK

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

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

Diversification Opportunities for Texas Roadhouse and FISH PAYK

0.62

Correlation Coefficient

Texas Roadhouse  FISH PAYK

Poor diversification

The 3 months correlation between Texas and FISH is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Texas Roadhouse and FISH PAYK HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FISH PAYK 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 FISH PAYK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FISH PAYK HEALTH has no effect on the direction of Texas Roadhouse i.e., Texas Roadhouse and FISH PAYK go up and down completely randomly.

Pair Corralation between Texas Roadhouse and FISH PAYK

Assuming the 90 days horizon Texas Roadhouse is expected to generate 0.98 times more return on investment than FISH PAYK. However, Texas Roadhouse is 1.02 times less risky than FISH PAYK. It trades about -0.09 of its potential returns per unit of risk. FISH PAYK HEALTH is currently generating about -0.15 per unit of risk. If you would invest  17,391  in Texas Roadhouse on December 20, 2024 and sell it today you would lose (1,793) from holding Texas Roadhouse or give up 10.31% of portfolio value over 90 days.

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

Texas Roadhouse  vs.  FISH PAYK HEALTH

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

FISH PAYK HEALTH

Risk-Adjusted Performance

Very Weak

Over the last 90 days FISH PAYK HEALTH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Texas Roadhouse and FISH PAYK

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

The idea behind Texas Roadhouse and FISH PAYK 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.

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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 Stocks Directory module to find actively traded stocks across global markets.