Correlation Between Texas Roadhouse and 26442CAB0

Can any of the company-specific risk be diversified away by investing in both Texas Roadhouse and 26442CAB0 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 26442CAB0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Texas Roadhouse and DUKE ENERGY CAROLINAS, you can compare the effects of market volatilities on Texas Roadhouse and 26442CAB0 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 26442CAB0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Texas Roadhouse and 26442CAB0.

Diversification Opportunities for Texas Roadhouse and 26442CAB0

0.15

Correlation Coefficient

Texas Roadhouse  26442CAB0

Average diversification

The 3 months correlation between Texas and 26442CAB0 is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Texas Roadhouse and DUKE ENERGY CAROLINAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUKE ENERGY CAROLINAS 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 26442CAB0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DUKE ENERGY CAROLINAS has no effect on the direction of Texas Roadhouse i.e., Texas Roadhouse and 26442CAB0 go up and down completely randomly.

Pair Corralation between Texas Roadhouse and 26442CAB0

Given the investment horizon of 90 days Texas Roadhouse is expected to under-perform the 26442CAB0. In addition to that, Texas Roadhouse is 1.32 times more volatile than DUKE ENERGY CAROLINAS. It trades about -0.03 of its total potential returns per unit of risk. DUKE ENERGY CAROLINAS is currently generating about 0.02 per unit of volatility. If you would invest  10,420  in DUKE ENERGY CAROLINAS on December 25, 2024 and sell it today you would earn a total of  107.00  from holding DUKE ENERGY CAROLINAS or generate 1.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	81.36%
Values	Daily Returns

Texas Roadhouse  vs.  DUKE ENERGY CAROLINAS

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 fairly strong basic indicators, Texas Roadhouse is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

DUKE ENERGY CAROLINAS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DUKE ENERGY CAROLINAS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 26442CAB0 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Texas Roadhouse and 26442CAB0

The main advantage of trading using opposite Texas Roadhouse and 26442CAB0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Texas Roadhouse position performs unexpectedly, 26442CAB0 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 26442CAB0 will offset losses from the drop in 26442CAB0's long position.

The idea behind Texas Roadhouse and DUKE ENERGY CAROLINAS 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.