Correlation Between Texas Roadhouse and Citizens
Can any of the company-specific risk be diversified away by investing in both Texas Roadhouse and Citizens 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 Citizens into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Texas Roadhouse and Citizens, you can compare the effects of market volatilities on Texas Roadhouse and Citizens 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 Citizens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Texas Roadhouse and Citizens.
Diversification Opportunities for Texas Roadhouse and Citizens
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Texas and Citizens is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Texas Roadhouse and Citizens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens 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 Citizens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens has no effect on the direction of Texas Roadhouse i.e., Texas Roadhouse and Citizens go up and down completely randomly.
Pair Corralation between Texas Roadhouse and Citizens
Given the investment horizon of 90 days Texas Roadhouse is expected to generate 3.55 times less return on investment than Citizens. But when comparing it to its historical volatility, Texas Roadhouse is 2.86 times less risky than Citizens. It trades about 0.1 of its potential returns per unit of risk. Citizens is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 231.00 in Citizens on September 3, 2024 and sell it today you would earn a total of 217.00 from holding Citizens or generate 93.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Texas Roadhouse vs. Citizens
Performance |
| Timeline |
| Texas Roadhouse |
| Citizens |
Texas Roadhouse and Citizens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Texas Roadhouse and Citizens
The main advantage of trading using opposite Texas Roadhouse and Citizens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Texas Roadhouse position performs unexpectedly, Citizens 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 Citizens will offset losses from the drop in Citizens' long position.| Texas Roadhouse vs. Brinker International | Texas Roadhouse vs. BJs Restaurants | Texas Roadhouse vs. Papa Johns International | Texas Roadhouse vs. Bloomin Brands |
| Citizens vs. CNO Financial Group | Citizens vs. Brighthouse Financial | Citizens vs. FG Annuities Life | Citizens vs. Prudential Public Limited |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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