Correlation Between Texas Roadhouse and Jumbo SA
Can any of the company-specific risk be diversified away by investing in both Texas Roadhouse and Jumbo SA 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 Jumbo SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Texas Roadhouse and Jumbo SA, you can compare the effects of market volatilities on Texas Roadhouse and Jumbo SA 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 Jumbo SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Texas Roadhouse and Jumbo SA.
Diversification Opportunities for Texas Roadhouse and Jumbo SA
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Texas and Jumbo is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Texas Roadhouse and Jumbo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jumbo SA 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 Jumbo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jumbo SA has no effect on the direction of Texas Roadhouse i.e., Texas Roadhouse and Jumbo SA go up and down completely randomly.
Pair Corralation between Texas Roadhouse and Jumbo SA
Assuming the 90 days horizon Texas Roadhouse is expected to generate 1.2 times more return on investment than Jumbo SA. However, Texas Roadhouse is 1.2 times more volatile than Jumbo SA. It trades about 0.21 of its potential returns per unit of risk. Jumbo SA is currently generating about -0.02 per unit of risk. If you would invest 16,595 in Texas Roadhouse on August 25, 2024 and sell it today you would earn a total of 1,795 from holding Texas Roadhouse or generate 10.82% 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. Jumbo SA
Performance |
| Timeline |
| Texas Roadhouse |
| Jumbo SA |
Texas Roadhouse and Jumbo SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Texas Roadhouse and Jumbo SA
The main advantage of trading using opposite Texas Roadhouse and Jumbo SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Texas Roadhouse position performs unexpectedly, Jumbo SA 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 Jumbo SA will offset losses from the drop in Jumbo SA's long position.| Texas Roadhouse vs. Hanison Construction Holdings | Texas Roadhouse vs. Citic Telecom International | Texas Roadhouse vs. North American Construction | Texas Roadhouse vs. TITAN MACHINERY |
| Jumbo SA vs. QUEEN S ROAD | Jumbo SA vs. BJs Restaurants | Jumbo SA vs. Texas Roadhouse | Jumbo SA vs. VARIOUS EATERIES LS |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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