Correlation Between Texas Roadhouse and MGIC INVESTMENT
Can any of the company-specific risk be diversified away by investing in both Texas Roadhouse and MGIC INVESTMENT 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 MGIC INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Texas Roadhouse and MGIC INVESTMENT, you can compare the effects of market volatilities on Texas Roadhouse and MGIC INVESTMENT 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 MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Texas Roadhouse and MGIC INVESTMENT.
Diversification Opportunities for Texas Roadhouse and MGIC INVESTMENT
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Texas and MGIC is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Texas Roadhouse and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT 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 MGIC INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGIC INVESTMENT has no effect on the direction of Texas Roadhouse i.e., Texas Roadhouse and MGIC INVESTMENT go up and down completely randomly.
Pair Corralation between Texas Roadhouse and MGIC INVESTMENT
Assuming the 90 days horizon Texas Roadhouse is expected to under-perform the MGIC INVESTMENT. In addition to that, Texas Roadhouse is 1.39 times more volatile than MGIC INVESTMENT. It trades about -0.16 of its total potential returns per unit of risk. MGIC INVESTMENT is currently generating about -0.1 per unit of volatility. If you would invest 2,487 in MGIC INVESTMENT on November 27, 2024 and sell it today you would lose (187.00) from holding MGIC INVESTMENT or give up 7.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Texas Roadhouse vs. MGIC INVESTMENT
Performance |
| Timeline |
| Texas Roadhouse |
| MGIC INVESTMENT |
Texas Roadhouse and MGIC INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Texas Roadhouse and MGIC INVESTMENT
The main advantage of trading using opposite Texas Roadhouse and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Texas Roadhouse position performs unexpectedly, MGIC INVESTMENT 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 MGIC INVESTMENT will offset losses from the drop in MGIC INVESTMENT's long position.| Texas Roadhouse vs. Sligro Food Group | Texas Roadhouse vs. Gruppo Mutuionline SpA | Texas Roadhouse vs. China Modern Dairy | Texas Roadhouse vs. Carsales |
| MGIC INVESTMENT vs. MeVis Medical Solutions | MGIC INVESTMENT vs. Genertec Universal Medical | MGIC INVESTMENT vs. Peijia Medical Limited | MGIC INVESTMENT vs. MEDICAL FACILITIES NEW |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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