Correlation Between Texas Roadhouse and National Beverage
Can any of the company-specific risk be diversified away by investing in both Texas Roadhouse and National Beverage 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 National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Texas Roadhouse and National Beverage Corp, you can compare the effects of market volatilities on Texas Roadhouse and National Beverage 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 National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Texas Roadhouse and National Beverage.
Diversification Opportunities for Texas Roadhouse and National Beverage
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Texas and National is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Texas Roadhouse and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp 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 National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Texas Roadhouse i.e., Texas Roadhouse and National Beverage go up and down completely randomly.
Pair Corralation between Texas Roadhouse and National Beverage
Given the investment horizon of 90 days Texas Roadhouse is expected to generate 0.83 times more return on investment than National Beverage. However, Texas Roadhouse is 1.21 times less risky than National Beverage. It trades about 0.11 of its potential returns per unit of risk. National Beverage Corp is currently generating about 0.01 per unit of risk. If you would invest 9,497 in Texas Roadhouse on September 3, 2024 and sell it today you would earn a total of 11,030 from holding Texas Roadhouse or generate 116.14% 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. National Beverage Corp
Performance |
| Timeline |
| Texas Roadhouse |
| National Beverage Corp |
Texas Roadhouse and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Texas Roadhouse and National Beverage
The main advantage of trading using opposite Texas Roadhouse and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Texas Roadhouse position performs unexpectedly, National Beverage 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 National Beverage will offset losses from the drop in National Beverage's long position.| Texas Roadhouse vs. Brinker International | Texas Roadhouse vs. BJs Restaurants | Texas Roadhouse vs. Papa Johns International | Texas Roadhouse vs. Bloomin Brands |
| National Beverage vs. Celsius Holdings | National Beverage vs. Monster Beverage Corp | National Beverage vs. Coca Cola Femsa SAB | National Beverage vs. Keurig Dr Pepper |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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