Correlation Between TEXAS ROADHOUSE and NexGen Energy
Can any of the company-specific risk be diversified away by investing in both TEXAS ROADHOUSE and NexGen Energy 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 NexGen Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TEXAS ROADHOUSE and NexGen Energy, you can compare the effects of market volatilities on TEXAS ROADHOUSE and NexGen Energy 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 NexGen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of TEXAS ROADHOUSE and NexGen Energy.
Diversification Opportunities for TEXAS ROADHOUSE and NexGen Energy
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TEXAS and NexGen is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding TEXAS ROADHOUSE and NexGen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGen Energy 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 NexGen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGen Energy has no effect on the direction of TEXAS ROADHOUSE i.e., TEXAS ROADHOUSE and NexGen Energy go up and down completely randomly.
Pair Corralation between TEXAS ROADHOUSE and NexGen Energy
Assuming the 90 days trading horizon TEXAS ROADHOUSE is expected to generate 0.42 times more return on investment than NexGen Energy. However, TEXAS ROADHOUSE is 2.39 times less risky than NexGen Energy. It trades about 0.14 of its potential returns per unit of risk. NexGen Energy is currently generating about 0.04 per unit of risk. If you would invest 10,543 in TEXAS ROADHOUSE on September 14, 2024 and sell it today you would earn a total of 7,657 from holding TEXAS ROADHOUSE or generate 72.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TEXAS ROADHOUSE vs. NexGen Energy
Performance |
| Timeline |
| TEXAS ROADHOUSE |
| NexGen Energy |
TEXAS ROADHOUSE and NexGen Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TEXAS ROADHOUSE and NexGen Energy
The main advantage of trading using opposite TEXAS ROADHOUSE and NexGen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TEXAS ROADHOUSE position performs unexpectedly, NexGen Energy 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 NexGen Energy will offset losses from the drop in NexGen Energy's long position.| TEXAS ROADHOUSE vs. Apple Inc | TEXAS ROADHOUSE vs. Apple Inc | TEXAS ROADHOUSE vs. Apple Inc | TEXAS ROADHOUSE vs. Apple Inc |
| NexGen Energy vs. Broadcom | NexGen Energy vs. Transport International Holdings | NexGen Energy vs. Computer And Technologies | NexGen Energy vs. TEXAS ROADHOUSE |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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