Correlation Between Texas Roadhouse and Virtus Investment

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

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

Diversification Opportunities for Texas Roadhouse and Virtus Investment

0.88

Correlation Coefficient

Texas Roadhouse  Virtus Investment

Very poor diversification

The 3 months correlation between Texas and Virtus is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Texas Roadhouse and Virtus Investment Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment 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 Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of Texas Roadhouse i.e., Texas Roadhouse and Virtus Investment go up and down completely randomly.

Pair Corralation between Texas Roadhouse and Virtus Investment

Assuming the 90 days horizon Texas Roadhouse is expected to generate 1.04 times more return on investment than Virtus Investment. However, Texas Roadhouse is 1.04 times more volatile than Virtus Investment Partners. It trades about -0.06 of its potential returns per unit of risk. Virtus Investment Partners is currently generating about -0.1 per unit of risk. If you would invest  17,600  in Texas Roadhouse on October 22, 2024 and sell it today you would lose (325.00) from holding Texas Roadhouse or give up 1.85% of portfolio value over 90 days.

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

Texas Roadhouse  vs.  Virtus Investment Partners

Texas Roadhouse

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Texas Roadhouse are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Virtus Investment

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Investment Partners are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Virtus Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Texas Roadhouse and Virtus Investment

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

The idea behind Texas Roadhouse and Virtus Investment Partners 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.