Correlation Between Good Times and Texas Roadhouse
Can any of the company-specific risk be diversified away by investing in both Good Times 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 Good Times and Texas Roadhouse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Good Times Restaurants and Texas Roadhouse, you can compare the effects of market volatilities on Good Times 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 Good Times with a short position of Texas Roadhouse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Good Times and Texas Roadhouse.
Diversification Opportunities for Good Times and Texas Roadhouse
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Good and Texas is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Good Times Restaurants and Texas Roadhouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Roadhouse and Good Times 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 Good Times Restaurants 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 Good Times i.e., Good Times and Texas Roadhouse go up and down completely randomly.
Pair Corralation between Good Times and Texas Roadhouse
Given the investment horizon of 90 days Good Times Restaurants is expected to under-perform the Texas Roadhouse. But the stock apears to be less risky and, when comparing its historical volatility, Good Times Restaurants is 1.32 times less risky than Texas Roadhouse. The stock trades about -0.02 of its potential returns per unit of risk. The Texas Roadhouse is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 19,448 in Texas Roadhouse on September 12, 2024 and sell it today you would lose (128.00) from holding Texas Roadhouse or give up 0.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Good Times Restaurants vs. Texas Roadhouse
Performance |
| Timeline |
| Good Times Restaurants |
| Texas Roadhouse |
Good Times and Texas Roadhouse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Good Times and Texas Roadhouse
The main advantage of trading using opposite Good Times and Texas Roadhouse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Good Times 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.| Good Times vs. Noble Romans | Good Times vs. Flanigans Enterprises | Good Times vs. FAT Brands | Good Times vs. El Pollo Loco |
| Texas Roadhouse vs. Noble Romans | Texas Roadhouse vs. Good Times Restaurants | Texas Roadhouse vs. Flanigans Enterprises | Texas Roadhouse vs. FAT 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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