Correlation Between Universal Insurance and Texas Roadhouse
Can any of the company-specific risk be diversified away by investing in both Universal Insurance 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 Universal Insurance and Texas Roadhouse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Insurance Holdings and Texas Roadhouse, you can compare the effects of market volatilities on Universal Insurance 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 Universal Insurance with a short position of Texas Roadhouse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and Texas Roadhouse.
Diversification Opportunities for Universal Insurance and Texas Roadhouse
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Universal and Texas is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and Texas Roadhouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Roadhouse and Universal Insurance 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 Universal Insurance Holdings 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 Universal Insurance i.e., Universal Insurance and Texas Roadhouse go up and down completely randomly.
Pair Corralation between Universal Insurance and Texas Roadhouse
Assuming the 90 days horizon Universal Insurance Holdings is expected to under-perform the Texas Roadhouse. In addition to that, Universal Insurance is 1.55 times more volatile than Texas Roadhouse. It trades about -0.29 of its total potential returns per unit of risk. Texas Roadhouse is currently generating about -0.05 per unit of volatility. If you would invest 17,715 in Texas Roadhouse on October 16, 2024 and sell it today you would lose (180.00) from holding Texas Roadhouse or give up 1.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Insurance Holdings vs. Texas Roadhouse
Performance |
| Timeline |
| Universal Insurance |
| Texas Roadhouse |
Universal Insurance and Texas Roadhouse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and Texas Roadhouse
The main advantage of trading using opposite Universal Insurance and Texas Roadhouse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance 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.| Universal Insurance vs. MCEWEN MINING INC | Universal Insurance vs. GALENA MINING LTD | Universal Insurance vs. Siamgas And Petrochemicals | Universal Insurance vs. MINCO SILVER |
| Texas Roadhouse vs. PURETECH HEALTH PLC | Texas Roadhouse vs. Siemens Healthineers AG | Texas Roadhouse vs. CLOVER HEALTH INV | Texas Roadhouse vs. CARDINAL HEALTH |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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