Correlation Between Texas Roadhouse and Nathans Famous
Can any of the company-specific risk be diversified away by investing in both Texas Roadhouse and Nathans Famous 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 Nathans Famous into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Texas Roadhouse and Nathans Famous, you can compare the effects of market volatilities on Texas Roadhouse and Nathans Famous 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 Nathans Famous. Check out your portfolio center. Please also check ongoing floating volatility patterns of Texas Roadhouse and Nathans Famous.
Diversification Opportunities for Texas Roadhouse and Nathans Famous
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Texas and Nathans is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Texas Roadhouse and Nathans Famous in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nathans Famous 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 Nathans Famous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nathans Famous has no effect on the direction of Texas Roadhouse i.e., Texas Roadhouse and Nathans Famous go up and down completely randomly.
Pair Corralation between Texas Roadhouse and Nathans Famous
Given the investment horizon of 90 days Texas Roadhouse is expected to generate 0.82 times more return on investment than Nathans Famous. However, Texas Roadhouse is 1.21 times less risky than Nathans Famous. It trades about -0.08 of its potential returns per unit of risk. Nathans Famous is currently generating about -0.15 per unit of risk. If you would invest 19,557 in Texas Roadhouse on September 13, 2024 and sell it today you would lose (582.00) from holding Texas Roadhouse or give up 2.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Texas Roadhouse vs. Nathans Famous
Performance |
| Timeline |
| Texas Roadhouse |
| Nathans Famous |
Texas Roadhouse and Nathans Famous Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Texas Roadhouse and Nathans Famous
The main advantage of trading using opposite Texas Roadhouse and Nathans Famous positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Texas Roadhouse position performs unexpectedly, Nathans Famous 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 Nathans Famous will offset losses from the drop in Nathans Famous' long position.The idea behind Texas Roadhouse and Nathans Famous pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |