Correlation Between Texas Roadhouse and Sporttotal

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

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

Diversification Opportunities for Texas Roadhouse and Sporttotal

0.78

Correlation Coefficient

Texas Roadhouse  Sporttotal

Poor diversification

The 3 months correlation between Texas and Sporttotal is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Texas Roadhouse and Sporttotal AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sporttotal AG 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 Sporttotal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sporttotal AG has no effect on the direction of Texas Roadhouse i.e., Texas Roadhouse and Sporttotal go up and down completely randomly.

Pair Corralation between Texas Roadhouse and Sporttotal

Assuming the 90 days horizon Texas Roadhouse is expected to under-perform the Sporttotal. In addition to that, Texas Roadhouse is 1.51 times more volatile than Sporttotal AG. It trades about -0.05 of its total potential returns per unit of risk. Sporttotal AG is currently generating about 0.01 per unit of volatility. If you would invest  22.00  in Sporttotal AG on November 29, 2024 and sell it today you would earn a total of  0.00  from holding Sporttotal AG or generate 0.0% return on investment over 90 days.

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

Texas Roadhouse  vs.  Sporttotal AG

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 unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Sporttotal AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sporttotal AG 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 basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Texas Roadhouse and Sporttotal

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

The idea behind Texas Roadhouse and Sporttotal AG 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.