Correlation Between Franchise and Texas Capital
Can any of the company-specific risk be diversified away by investing in both Franchise and Texas Capital 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 Franchise and Texas Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franchise Group and Texas Capital Bancshares, you can compare the effects of market volatilities on Franchise and Texas Capital 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 Franchise with a short position of Texas Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franchise and Texas Capital.
Diversification Opportunities for Franchise and Texas Capital
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franchise and Texas is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Franchise Group and Texas Capital Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Capital Bancshares and Franchise 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 Franchise Group are associated (or correlated) with Texas Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Capital Bancshares has no effect on the direction of Franchise i.e., Franchise and Texas Capital go up and down completely randomly.
Pair Corralation between Franchise and Texas Capital
If you would invest 2,493 in Franchise Group on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Franchise Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Franchise Group vs. Texas Capital Bancshares
Performance |
| Timeline |
| Franchise Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Texas Capital Bancshares |
Franchise and Texas Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franchise and Texas Capital
The main advantage of trading using opposite Franchise and Texas Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franchise position performs unexpectedly, Texas Capital 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 Capital will offset losses from the drop in Texas Capital's long position.| Franchise vs. Compania Cervecerias Unidas | Franchise vs. Boston Beer | Franchise vs. Westrock Coffee | Franchise vs. Entravision Communications |
| Texas Capital vs. Capital One Financial | Texas Capital vs. Capital One Financial | Texas Capital vs. Bank of America |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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