Correlation Between Texas Roadhouse and Marriott International

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

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

Diversification Opportunities for Texas Roadhouse and Marriott International

0.0

Correlation Coefficient

Texas Roadhouse  Marriott International

Pay attention - limited upside

The 3 months correlation between Texas and Marriott is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Texas Roadhouse and Marriott International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marriott International 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 Marriott International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marriott International has no effect on the direction of Texas Roadhouse i.e., Texas Roadhouse and Marriott International go up and down completely randomly.

Pair Corralation between Texas Roadhouse and Marriott International

If you would invest  0.00  in Marriott International on December 21, 2024 and sell it today you would earn a total of  0.00  from holding Marriott International or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.69%
Values	Daily Returns

Texas Roadhouse  vs.  Marriott International

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.

Marriott International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marriott International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Marriott International is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Texas Roadhouse and Marriott International

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

The idea behind Texas Roadhouse and Marriott International 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 Global Correlations module to find global opportunities by holding instruments from different markets.