Correlation Between RCI Hospitality and Texas Roadhouse
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality 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 RCI Hospitality and Texas Roadhouse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCI Hospitality Holdings and Texas Roadhouse, you can compare the effects of market volatilities on RCI Hospitality 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 RCI Hospitality with a short position of Texas Roadhouse. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and Texas Roadhouse.
Diversification Opportunities for RCI Hospitality and Texas Roadhouse
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between RCI and Texas is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Texas Roadhouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Roadhouse and RCI Hospitality 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 RCI Hospitality Holdings 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 RCI Hospitality i.e., RCI Hospitality and Texas Roadhouse go up and down completely randomly.
Pair Corralation between RCI Hospitality and Texas Roadhouse
Assuming the 90 days trading horizon RCI Hospitality Holdings is expected to under-perform the Texas Roadhouse. But the stock apears to be less risky and, when comparing its historical volatility, RCI Hospitality Holdings is 1.08 times less risky than Texas Roadhouse. The stock trades about -0.21 of its potential returns per unit of risk. The Texas Roadhouse is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 17,600 in Texas Roadhouse on October 24, 2024 and sell it today you would lose (340.00) from holding Texas Roadhouse or give up 1.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCI Hospitality Holdings vs. Texas Roadhouse
Performance |
| Timeline |
| RCI Hospitality Holdings |
| Texas Roadhouse |
RCI Hospitality and Texas Roadhouse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCI Hospitality and Texas Roadhouse
The main advantage of trading using opposite RCI Hospitality and Texas Roadhouse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality 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.| RCI Hospitality vs. ALBIS LEASING AG | RCI Hospitality vs. The Trade Desk | RCI Hospitality vs. H2O Retailing | RCI Hospitality vs. Lendlease Group |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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