Correlation Between Hooker Furniture and Texas Roadhouse
Can any of the company-specific risk be diversified away by investing in both Hooker Furniture 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 Hooker Furniture and Texas Roadhouse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hooker Furniture and Texas Roadhouse, you can compare the effects of market volatilities on Hooker Furniture 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 Hooker Furniture with a short position of Texas Roadhouse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hooker Furniture and Texas Roadhouse.
Diversification Opportunities for Hooker Furniture and Texas Roadhouse
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hooker and Texas is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and Texas Roadhouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Roadhouse and Hooker Furniture 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 Hooker Furniture 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 Hooker Furniture i.e., Hooker Furniture and Texas Roadhouse go up and down completely randomly.
Pair Corralation between Hooker Furniture and Texas Roadhouse
Given the investment horizon of 90 days Hooker Furniture is expected to generate 1.87 times more return on investment than Texas Roadhouse. However, Hooker Furniture is 1.87 times more volatile than Texas Roadhouse. It trades about 0.25 of its potential returns per unit of risk. Texas Roadhouse is currently generating about 0.21 per unit of risk. If you would invest 1,603 in Hooker Furniture on September 1, 2024 and sell it today you would earn a total of 270.00 from holding Hooker Furniture or generate 16.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hooker Furniture vs. Texas Roadhouse
Performance |
| Timeline |
| Hooker Furniture |
| Texas Roadhouse |
Hooker Furniture and Texas Roadhouse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hooker Furniture and Texas Roadhouse
The main advantage of trading using opposite Hooker Furniture and Texas Roadhouse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hooker Furniture 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.| Hooker Furniture vs. Bassett Furniture Industries | Hooker Furniture vs. Willis Lease Finance | Hooker Furniture vs. Rocky Brands | Hooker Furniture vs. First Business Financial |
| Texas Roadhouse vs. The Wendys Co | Texas Roadhouse vs. Shake Shack | Texas Roadhouse vs. Papa Johns International | Texas Roadhouse vs. Darden Restaurants |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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