Correlation Between Texas Roadhouse and Flanigans Enterprises

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

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

Diversification Opportunities for Texas Roadhouse and Flanigans Enterprises

-0.59

Correlation Coefficient

Texas Roadhouse  Flanigans Enterprises

Excellent diversification

The 3 months correlation between Texas and Flanigans is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Texas Roadhouse and Flanigans Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flanigans Enterprises 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 Flanigans Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flanigans Enterprises has no effect on the direction of Texas Roadhouse i.e., Texas Roadhouse and Flanigans Enterprises go up and down completely randomly.

Pair Corralation between Texas Roadhouse and Flanigans Enterprises

Given the investment horizon of 90 days Texas Roadhouse is expected to generate 0.94 times more return on investment than Flanigans Enterprises. However, Texas Roadhouse is 1.06 times less risky than Flanigans Enterprises. It trades about 0.15 of its potential returns per unit of risk. Flanigans Enterprises is currently generating about -0.05 per unit of risk. If you would invest  16,278  in Texas Roadhouse on September 14, 2024 and sell it today you would earn a total of  2,697  from holding Texas Roadhouse or generate 16.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	87.3%
Values	Daily Returns

Texas Roadhouse  vs.  Flanigans Enterprises

Texas Roadhouse

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Texas Roadhouse are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Texas Roadhouse demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Flanigans Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flanigans Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Flanigans Enterprises is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Texas Roadhouse and Flanigans Enterprises

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

The idea behind Texas Roadhouse and Flanigans Enterprises 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.