Correlation Between Texas Roadhouse and Sun Life

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

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

Diversification Opportunities for Texas Roadhouse and Sun Life

0.73

Correlation Coefficient

Texas Roadhouse  Sun Life

Poor diversification

The 3 months correlation between Texas and Sun is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Texas Roadhouse and Sun Life Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Financial 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 Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Financial has no effect on the direction of Texas Roadhouse i.e., Texas Roadhouse and Sun Life go up and down completely randomly.

Pair Corralation between Texas Roadhouse and Sun Life

Given the investment horizon of 90 days Texas Roadhouse is expected to under-perform the Sun Life. In addition to that, Texas Roadhouse is 2.19 times more volatile than Sun Life Financial. It trades about -0.12 of its total potential returns per unit of risk. Sun Life Financial is currently generating about -0.06 per unit of volatility. If you would invest  6,004  in Sun Life Financial on September 19, 2024 and sell it today you would lose (53.00) from holding Sun Life Financial or give up 0.88% of portfolio value over 90 days.

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

Texas Roadhouse  vs.  Sun Life Financial

Texas Roadhouse

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Texas Roadhouse are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Texas Roadhouse may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sun Life Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Sun Life is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Texas Roadhouse and Sun Life

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

The idea behind Texas Roadhouse and Sun Life Financial 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.