Correlation Between TEXAS ROADHOUSE and WINMARK
Can any of the company-specific risk be diversified away by investing in both TEXAS ROADHOUSE and WINMARK 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 WINMARK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TEXAS ROADHOUSE and WINMARK, you can compare the effects of market volatilities on TEXAS ROADHOUSE and WINMARK 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 WINMARK. Check out your portfolio center. Please also check ongoing floating volatility patterns of TEXAS ROADHOUSE and WINMARK.
Diversification Opportunities for TEXAS ROADHOUSE and WINMARK
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TEXAS and WINMARK is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding TEXAS ROADHOUSE and WINMARK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WINMARK 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 WINMARK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WINMARK has no effect on the direction of TEXAS ROADHOUSE i.e., TEXAS ROADHOUSE and WINMARK go up and down completely randomly.
Pair Corralation between TEXAS ROADHOUSE and WINMARK
Assuming the 90 days trading horizon TEXAS ROADHOUSE is expected to generate 0.86 times more return on investment than WINMARK. However, TEXAS ROADHOUSE is 1.17 times less risky than WINMARK. It trades about 0.1 of its potential returns per unit of risk. WINMARK is currently generating about 0.06 per unit of risk. If you would invest 8,719 in TEXAS ROADHOUSE on October 11, 2024 and sell it today you would earn a total of 8,746 from holding TEXAS ROADHOUSE or generate 100.31% 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. WINMARK
Performance |
| Timeline |
| TEXAS ROADHOUSE |
| WINMARK |
TEXAS ROADHOUSE and WINMARK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TEXAS ROADHOUSE and WINMARK
The main advantage of trading using opposite TEXAS ROADHOUSE and WINMARK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TEXAS ROADHOUSE position performs unexpectedly, WINMARK 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 WINMARK will offset losses from the drop in WINMARK's long position.| TEXAS ROADHOUSE vs. Apple Inc | TEXAS ROADHOUSE vs. Apple Inc | TEXAS ROADHOUSE vs. Apple Inc | TEXAS ROADHOUSE vs. Apple Inc |
| WINMARK vs. Suntory Beverage Food | WINMARK vs. Air Transport Services | WINMARK vs. Monster Beverage Corp | WINMARK 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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