Correlation Between TEXAS ROADHOUSE and KAUFMAN ET
Can any of the company-specific risk be diversified away by investing in both TEXAS ROADHOUSE and KAUFMAN ET 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 TEXAS ROADHOUSE and KAUFMAN ET into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TEXAS ROADHOUSE and KAUFMAN ET BROAD, you can compare the effects of market volatilities on TEXAS ROADHOUSE and KAUFMAN ET 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 TEXAS ROADHOUSE with a short position of KAUFMAN ET. Check out your portfolio center. Please also check ongoing floating volatility patterns of TEXAS ROADHOUSE and KAUFMAN ET.
Diversification Opportunities for TEXAS ROADHOUSE and KAUFMAN ET
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between TEXAS and KAUFMAN is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding TEXAS ROADHOUSE and KAUFMAN ET BROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAUFMAN ET BROAD and TEXAS ROADHOUSE 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 TEXAS ROADHOUSE are associated (or correlated) with KAUFMAN ET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAUFMAN ET BROAD has no effect on the direction of TEXAS ROADHOUSE i.e., TEXAS ROADHOUSE and KAUFMAN ET go up and down completely randomly.
Pair Corralation between TEXAS ROADHOUSE and KAUFMAN ET
Assuming the 90 days trading horizon TEXAS ROADHOUSE is expected to generate 0.92 times more return on investment than KAUFMAN ET. However, TEXAS ROADHOUSE is 1.08 times less risky than KAUFMAN ET. It trades about 0.05 of its potential returns per unit of risk. KAUFMAN ET BROAD is currently generating about 0.04 per unit of risk. If you would invest 9,617 in TEXAS ROADHOUSE on January 15, 2025 and sell it today you would earn a total of 4,593 from holding TEXAS ROADHOUSE or generate 47.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TEXAS ROADHOUSE vs. KAUFMAN ET BROAD
Performance |
| Timeline |
| TEXAS ROADHOUSE |
| KAUFMAN ET BROAD |
TEXAS ROADHOUSE and KAUFMAN ET Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TEXAS ROADHOUSE and KAUFMAN ET
The main advantage of trading using opposite TEXAS ROADHOUSE and KAUFMAN ET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TEXAS ROADHOUSE position performs unexpectedly, KAUFMAN ET 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 KAUFMAN ET will offset losses from the drop in KAUFMAN ET's long position.| TEXAS ROADHOUSE vs. AUSNUTRIA DAIRY | TEXAS ROADHOUSE vs. Lifeway Foods | TEXAS ROADHOUSE vs. PREMIER FOODS | TEXAS ROADHOUSE vs. Monster Beverage Corp |
| KAUFMAN ET vs. FAIR ISAAC | KAUFMAN ET vs. SEALED AIR | KAUFMAN ET vs. Enter Air SA | KAUFMAN ET vs. Westinghouse Air Brake |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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