Correlation Between LIFENET INSURANCE and TEXAS ROADHOUSE
Can any of the company-specific risk be diversified away by investing in both LIFENET 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 LIFENET 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 LIFENET INSURANCE CO and TEXAS ROADHOUSE, you can compare the effects of market volatilities on LIFENET 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 LIFENET INSURANCE with a short position of TEXAS ROADHOUSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFENET INSURANCE and TEXAS ROADHOUSE.
Diversification Opportunities for LIFENET INSURANCE and TEXAS ROADHOUSE
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LIFENET and TEXAS is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding LIFENET INSURANCE CO and TEXAS ROADHOUSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TEXAS ROADHOUSE and LIFENET 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 LIFENET INSURANCE CO 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 LIFENET INSURANCE i.e., LIFENET INSURANCE and TEXAS ROADHOUSE go up and down completely randomly.
Pair Corralation between LIFENET INSURANCE and TEXAS ROADHOUSE
Assuming the 90 days horizon LIFENET INSURANCE CO is expected to under-perform the TEXAS ROADHOUSE. But the stock apears to be less risky and, when comparing its historical volatility, LIFENET INSURANCE CO is 1.01 times less risky than TEXAS ROADHOUSE. The stock trades about -0.01 of its potential returns per unit of risk. The TEXAS ROADHOUSE is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 17,385 in TEXAS ROADHOUSE on August 29, 2024 and sell it today you would earn a total of 1,830 from holding TEXAS ROADHOUSE or generate 10.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIFENET INSURANCE CO vs. TEXAS ROADHOUSE
Performance |
| Timeline |
| LIFENET INSURANCE |
| TEXAS ROADHOUSE |
LIFENET INSURANCE and TEXAS ROADHOUSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFENET INSURANCE and TEXAS ROADHOUSE
The main advantage of trading using opposite LIFENET INSURANCE and TEXAS ROADHOUSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFENET 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.| LIFENET INSURANCE vs. Xtrackers LevDAX | LIFENET INSURANCE vs. Xtrackers ShortDAX | LIFENET INSURANCE vs. Lyxor 1 |
| TEXAS ROADHOUSE vs. Apple Inc | TEXAS ROADHOUSE vs. Apple Inc | TEXAS ROADHOUSE vs. Superior Plus Corp | TEXAS ROADHOUSE vs. SIVERS SEMICONDUCTORS AB |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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