Correlation Between Sligro Food and Texas Roadhouse

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

By analyzing existing cross correlation between Sligro Food Group and Texas Roadhouse, you can compare the effects of market volatilities on Sligro Food and Texas Roadhouse 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 Sligro Food with a short position of Texas Roadhouse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sligro Food and Texas Roadhouse.

Diversification Opportunities for Sligro Food and Texas Roadhouse

-0.46

Correlation Coefficient

Sligro Food  Texas Roadhouse

Very good diversification

The 3 months correlation between Sligro and Texas is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Sligro Food Group and Texas Roadhouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Roadhouse and Sligro Food 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 Sligro Food Group are associated (or correlated) with Texas Roadhouse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Roadhouse has no effect on the direction of Sligro Food i.e., Sligro Food and Texas Roadhouse go up and down completely randomly.

Pair Corralation between Sligro Food and Texas Roadhouse

Assuming the 90 days horizon Sligro Food Group is expected to under-perform the Texas Roadhouse. In addition to that, Sligro Food is 1.04 times more volatile than Texas Roadhouse. It trades about -0.07 of its total potential returns per unit of risk. Texas Roadhouse is currently generating about 0.12 per unit of volatility. If you would invest  11,188  in Texas Roadhouse on October 3, 2024 and sell it today you would earn a total of  6,831  from holding Texas Roadhouse or generate 61.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.26%
Values	Daily Returns

Sligro Food Group  vs.  Texas Roadhouse

Sligro Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sligro Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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.

Texas Roadhouse

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Texas Roadhouse are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Texas Roadhouse is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Sligro Food and Texas Roadhouse

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

The idea behind Sligro Food Group and Texas Roadhouse 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.