Correlation Between NBCUNIVERSAL and Texas Roadhouse

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

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

Diversification Opportunities for NBCUNIVERSAL and Texas Roadhouse

0.03

Correlation Coefficient

NBCUNIVERSAL  Texas Roadhouse

Significant diversification

The 3 months correlation between NBCUNIVERSAL and Texas is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding NBCUNIVERSAL MEDIA LLC and Texas Roadhouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Roadhouse and NBCUNIVERSAL 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 NBCUNIVERSAL MEDIA LLC 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 NBCUNIVERSAL i.e., NBCUNIVERSAL and Texas Roadhouse go up and down completely randomly.

Pair Corralation between NBCUNIVERSAL and Texas Roadhouse

Assuming the 90 days trading horizon NBCUNIVERSAL MEDIA LLC is expected to generate 1.19 times more return on investment than Texas Roadhouse. However, NBCUNIVERSAL is 1.19 times more volatile than Texas Roadhouse. It trades about 0.12 of its potential returns per unit of risk. Texas Roadhouse is currently generating about -0.31 per unit of risk. If you would invest  10,501  in NBCUNIVERSAL MEDIA LLC on September 25, 2024 and sell it today you would earn a total of  291.00  from holding NBCUNIVERSAL MEDIA LLC or generate 2.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	65.0%
Values	Daily Returns

NBCUNIVERSAL MEDIA LLC  vs.  Texas Roadhouse

NBCUNIVERSAL MEDIA LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NBCUNIVERSAL MEDIA LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NBCUNIVERSAL is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with NBCUNIVERSAL and Texas Roadhouse

The main advantage of trading using opposite NBCUNIVERSAL and Texas Roadhouse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NBCUNIVERSAL 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 NBCUNIVERSAL MEDIA LLC 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.