Correlation Between Texas Roadhouse and Allegheny Technologies
Can any of the company-specific risk be diversified away by investing in both Texas Roadhouse and Allegheny Technologies 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 Allegheny Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Texas Roadhouse and Allegheny Technologies Incorporated, you can compare the effects of market volatilities on Texas Roadhouse and Allegheny Technologies 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 Allegheny Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Texas Roadhouse and Allegheny Technologies.
Diversification Opportunities for Texas Roadhouse and Allegheny Technologies
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Texas and Allegheny is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Texas Roadhouse and Allegheny Technologies Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegheny Technologies 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 Allegheny Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegheny Technologies has no effect on the direction of Texas Roadhouse i.e., Texas Roadhouse and Allegheny Technologies go up and down completely randomly.
Pair Corralation between Texas Roadhouse and Allegheny Technologies
Given the investment horizon of 90 days Texas Roadhouse is expected to generate 0.63 times more return on investment than Allegheny Technologies. However, Texas Roadhouse is 1.59 times less risky than Allegheny Technologies. It trades about 0.22 of its potential returns per unit of risk. Allegheny Technologies Incorporated is currently generating about -0.09 per unit of risk. If you would invest 17,660 in Texas Roadhouse on August 29, 2024 and sell it today you would earn a total of 2,684 from holding Texas Roadhouse or generate 15.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Texas Roadhouse vs. Allegheny Technologies Incorpo
Performance |
| Timeline |
| Texas Roadhouse |
| Allegheny Technologies |
Texas Roadhouse and Allegheny Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Texas Roadhouse and Allegheny Technologies
The main advantage of trading using opposite Texas Roadhouse and Allegheny Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Texas Roadhouse position performs unexpectedly, Allegheny Technologies 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 Allegheny Technologies will offset losses from the drop in Allegheny Technologies' long position.| Texas Roadhouse vs. Jack In The | Texas Roadhouse vs. Potbelly Co | Texas Roadhouse vs. BJs Restaurants | Texas Roadhouse vs. Rave Restaurant Group |
| Allegheny Technologies vs. Haynes International | Allegheny Technologies vs. Ryerson Holding Corp | Allegheny Technologies vs. Mueller Industries | Allegheny Technologies vs. ESAB Corp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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