Correlation Between Trump Media and Texas Roadhouse
Can any of the company-specific risk be diversified away by investing in both Trump Media 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 Trump Media and Texas Roadhouse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trump Media Technology and Texas Roadhouse, you can compare the effects of market volatilities on Trump Media 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 Trump Media with a short position of Texas Roadhouse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trump Media and Texas Roadhouse.
Diversification Opportunities for Trump Media and Texas Roadhouse
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Trump and Texas is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Trump Media Technology and Texas Roadhouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Roadhouse and Trump Media 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 Trump Media Technology 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 Trump Media i.e., Trump Media and Texas Roadhouse go up and down completely randomly.
Pair Corralation between Trump Media and Texas Roadhouse
Considering the 90-day investment horizon Trump Media Technology is expected to generate 5.58 times more return on investment than Texas Roadhouse. However, Trump Media is 5.58 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 0.2 per unit of risk. If you would invest 1,808 in Trump Media Technology on August 31, 2024 and sell it today you would earn a total of 1,236 from holding Trump Media Technology or generate 68.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trump Media Technology vs. Texas Roadhouse
Performance |
| Timeline |
| Trump Media Technology |
| Texas Roadhouse |
Trump Media and Texas Roadhouse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trump Media and Texas Roadhouse
The main advantage of trading using opposite Trump Media and Texas Roadhouse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trump Media 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.| Trump Media vs. Apogee Enterprises | Trump Media vs. Oasis Hotel Resort | Trump Media vs. Jutal Offshore Oil | Trump Media vs. KNOT Offshore Partners |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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