Correlation Between Texas Roadhouse and GEN Restaurant
Can any of the company-specific risk be diversified away by investing in both Texas Roadhouse and GEN Restaurant 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 GEN Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Texas Roadhouse and GEN Restaurant Group,, you can compare the effects of market volatilities on Texas Roadhouse and GEN Restaurant 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 GEN Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Texas Roadhouse and GEN Restaurant.
Diversification Opportunities for Texas Roadhouse and GEN Restaurant
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Texas and GEN is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Texas Roadhouse and GEN Restaurant Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEN Restaurant Group, 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 GEN Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEN Restaurant Group, has no effect on the direction of Texas Roadhouse i.e., Texas Roadhouse and GEN Restaurant go up and down completely randomly.
Pair Corralation between Texas Roadhouse and GEN Restaurant
Given the investment horizon of 90 days Texas Roadhouse is expected to generate 0.34 times more return on investment than GEN Restaurant. However, Texas Roadhouse is 2.9 times less risky than GEN Restaurant. It trades about 0.22 of its potential returns per unit of risk. GEN Restaurant Group, is currently generating about -0.07 per unit of risk. If you would invest 18,811 in Texas Roadhouse on August 29, 2024 and sell it today you would earn a total of 1,660 from holding Texas Roadhouse or generate 8.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Texas Roadhouse vs. GEN Restaurant Group,
Performance |
| Timeline |
| Texas Roadhouse |
| GEN Restaurant Group, |
Texas Roadhouse and GEN Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Texas Roadhouse and GEN Restaurant
The main advantage of trading using opposite Texas Roadhouse and GEN Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Texas Roadhouse position performs unexpectedly, GEN Restaurant 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 GEN Restaurant will offset losses from the drop in GEN Restaurant's long position.| Texas Roadhouse vs. Brinker International | Texas Roadhouse vs. BJs Restaurants | Texas Roadhouse vs. Papa Johns International | Texas Roadhouse vs. Bloomin Brands |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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