Correlation Between TEXAS ROADHOUSE and Lion One
Can any of the company-specific risk be diversified away by investing in both TEXAS ROADHOUSE and Lion One 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 Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TEXAS ROADHOUSE and Lion One Metals, you can compare the effects of market volatilities on TEXAS ROADHOUSE and Lion One 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 Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of TEXAS ROADHOUSE and Lion One.
Diversification Opportunities for TEXAS ROADHOUSE and Lion One
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between TEXAS and Lion is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding TEXAS ROADHOUSE and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals 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 Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of TEXAS ROADHOUSE i.e., TEXAS ROADHOUSE and Lion One go up and down completely randomly.
Pair Corralation between TEXAS ROADHOUSE and Lion One
Assuming the 90 days trading horizon TEXAS ROADHOUSE is expected to generate 0.35 times more return on investment than Lion One. However, TEXAS ROADHOUSE is 2.86 times less risky than Lion One. It trades about 0.11 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.04 per unit of risk. If you would invest 8,625 in TEXAS ROADHOUSE on August 28, 2024 and sell it today you would earn a total of 9,990 from holding TEXAS ROADHOUSE or generate 115.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
TEXAS ROADHOUSE vs. Lion One Metals
Performance |
| Timeline |
| TEXAS ROADHOUSE |
| Lion One Metals |
TEXAS ROADHOUSE and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TEXAS ROADHOUSE and Lion One
The main advantage of trading using opposite TEXAS ROADHOUSE and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TEXAS ROADHOUSE position performs unexpectedly, Lion One 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 Lion One will offset losses from the drop in Lion One's long position.| TEXAS ROADHOUSE vs. Apple Inc | TEXAS ROADHOUSE vs. Apple Inc | TEXAS ROADHOUSE vs. Microsoft | TEXAS ROADHOUSE vs. Microsoft |
| Lion One vs. Franco Nevada | Lion One vs. Agnico Eagle Mines | Lion One vs. Superior Plus Corp | Lion One vs. NMI Holdings |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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