Correlation Between Citizens and Texas Roadhouse
Can any of the company-specific risk be diversified away by investing in both Citizens 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 Citizens and Texas Roadhouse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens and Texas Roadhouse, you can compare the effects of market volatilities on Citizens 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 Citizens with a short position of Texas Roadhouse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens and Texas Roadhouse.
Diversification Opportunities for Citizens and Texas Roadhouse
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citizens and Texas is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Citizens and Texas Roadhouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Roadhouse and Citizens 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 Citizens 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 Citizens i.e., Citizens and Texas Roadhouse go up and down completely randomly.
Pair Corralation between Citizens and Texas Roadhouse
Considering the 90-day investment horizon Citizens is expected to generate 2.86 times more return on investment than Texas Roadhouse. However, Citizens is 2.86 times more volatile than Texas Roadhouse. It trades about 0.13 of its potential returns per unit of risk. Texas Roadhouse is currently generating about 0.1 per unit of risk. If you would invest 231.00 in Citizens on September 3, 2024 and sell it today you would earn a total of 217.00 from holding Citizens or generate 93.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens vs. Texas Roadhouse
Performance |
| Timeline |
| Citizens |
| Texas Roadhouse |
Citizens and Texas Roadhouse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens and Texas Roadhouse
The main advantage of trading using opposite Citizens and Texas Roadhouse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens 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.| Citizens vs. CNO Financial Group | Citizens vs. Brighthouse Financial | Citizens vs. FG Annuities Life | Citizens vs. Prudential Public Limited |
| Texas Roadhouse vs. Brinker International | Texas Roadhouse vs. BJs Restaurants | Texas Roadhouse vs. Papa Johns International | Texas Roadhouse vs. Bloomin Brands |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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