Correlation Between TC Energy and TEXAS ROADHOUSE

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

By analyzing existing cross correlation between TC Energy and TEXAS ROADHOUSE, you can compare the effects of market volatilities on TC Energy 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 TC Energy with a short position of TEXAS ROADHOUSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of TC Energy and TEXAS ROADHOUSE.

Diversification Opportunities for TC Energy and TEXAS ROADHOUSE

0.36

Correlation Coefficient

TC Energy  TEXAS ROADHOUSE

Weak diversification

The 3 months correlation between TRS and TEXAS is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding TC Energy and TEXAS ROADHOUSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TEXAS ROADHOUSE and TC Energy 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 TC Energy 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 TC Energy i.e., TC Energy and TEXAS ROADHOUSE go up and down completely randomly.

Pair Corralation between TC Energy and TEXAS ROADHOUSE

Assuming the 90 days trading horizon TC Energy is expected to generate 0.93 times more return on investment than TEXAS ROADHOUSE. However, TC Energy is 1.07 times less risky than TEXAS ROADHOUSE. It trades about 0.04 of its potential returns per unit of risk. TEXAS ROADHOUSE is currently generating about -0.08 per unit of risk. If you would invest  4,269  in TC Energy on December 19, 2024 and sell it today you would earn a total of  138.00  from holding TC Energy or generate 3.23% return on investment over 90 days.

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

TC Energy  vs.  TEXAS ROADHOUSE

TC Energy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TC Energy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, TC Energy is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with TC Energy and TEXAS ROADHOUSE

The main advantage of trading using opposite TC Energy and TEXAS ROADHOUSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TC Energy 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 TC Energy 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.