Correlation Between TEXAS ROADHOUSE and LIFENET INSURANCE
Can any of the company-specific risk be diversified away by investing in both TEXAS ROADHOUSE and LIFENET INSURANCE 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 LIFENET INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TEXAS ROADHOUSE and LIFENET INSURANCE CO, you can compare the effects of market volatilities on TEXAS ROADHOUSE and LIFENET INSURANCE 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 LIFENET INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of TEXAS ROADHOUSE and LIFENET INSURANCE.
Diversification Opportunities for TEXAS ROADHOUSE and LIFENET INSURANCE
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TEXAS and LIFENET is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding TEXAS ROADHOUSE and LIFENET INSURANCE CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFENET INSURANCE 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 LIFENET INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFENET INSURANCE has no effect on the direction of TEXAS ROADHOUSE i.e., TEXAS ROADHOUSE and LIFENET INSURANCE go up and down completely randomly.
Pair Corralation between TEXAS ROADHOUSE and LIFENET INSURANCE
Assuming the 90 days trading horizon TEXAS ROADHOUSE is expected to generate 1.01 times more return on investment than LIFENET INSURANCE. However, TEXAS ROADHOUSE is 1.01 times more volatile than LIFENET INSURANCE CO. It trades about 0.24 of its potential returns per unit of risk. LIFENET INSURANCE CO is currently generating about -0.01 per unit of risk. If you would invest 17,385 in TEXAS ROADHOUSE on August 29, 2024 and sell it today you would earn a total of 1,830 from holding TEXAS ROADHOUSE or generate 10.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TEXAS ROADHOUSE vs. LIFENET INSURANCE CO
Performance |
| Timeline |
| TEXAS ROADHOUSE |
| LIFENET INSURANCE |
TEXAS ROADHOUSE and LIFENET INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TEXAS ROADHOUSE and LIFENET INSURANCE
The main advantage of trading using opposite TEXAS ROADHOUSE and LIFENET INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TEXAS ROADHOUSE position performs unexpectedly, LIFENET INSURANCE 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 LIFENET INSURANCE will offset losses from the drop in LIFENET INSURANCE's long position.| TEXAS ROADHOUSE vs. Apple Inc | TEXAS ROADHOUSE vs. Apple Inc | TEXAS ROADHOUSE vs. Superior Plus Corp | TEXAS ROADHOUSE vs. SIVERS SEMICONDUCTORS AB |
| LIFENET INSURANCE vs. Xtrackers LevDAX | LIFENET INSURANCE vs. Xtrackers ShortDAX | LIFENET INSURANCE vs. Lyxor 1 |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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