Correlation Between Compass Group and Texas Roadhouse
Can any of the company-specific risk be diversified away by investing in both Compass Group and Texas Roadhouse 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 Compass Group and Texas Roadhouse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compass Group PLC and Texas Roadhouse, you can compare the effects of market volatilities on Compass Group and Texas Roadhouse 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 Compass Group with a short position of Texas Roadhouse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Group and Texas Roadhouse.
Diversification Opportunities for Compass Group and Texas Roadhouse
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Compass and Texas is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Compass Group PLC and Texas Roadhouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Roadhouse and Compass Group 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 Compass Group PLC are associated (or correlated) with Texas Roadhouse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Roadhouse has no effect on the direction of Compass Group i.e., Compass Group and Texas Roadhouse go up and down completely randomly.
Pair Corralation between Compass Group and Texas Roadhouse
Assuming the 90 days trading horizon Compass Group is expected to generate 1.22 times less return on investment than Texas Roadhouse. But when comparing it to its historical volatility, Compass Group PLC is 1.11 times less risky than Texas Roadhouse. It trades about 0.08 of its potential returns per unit of risk. Texas Roadhouse is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9,318 in Texas Roadhouse on December 1, 2024 and sell it today you would earn a total of 7,632 from holding Texas Roadhouse or generate 81.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compass Group PLC vs. Texas Roadhouse
Performance |
| Timeline |
| Compass Group PLC |
| Texas Roadhouse |
Compass Group and Texas Roadhouse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Group and Texas Roadhouse
The main advantage of trading using opposite Compass Group and Texas Roadhouse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Group position performs unexpectedly, Texas Roadhouse 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 Texas Roadhouse will offset losses from the drop in Texas Roadhouse's long position.| Compass Group vs. CONTAGIOUS GAMING INC | Compass Group vs. FIH MOBILE | Compass Group vs. BRAGG GAMING GRP | Compass Group vs. Penn National Gaming |
| Texas Roadhouse vs. InterContinental Hotels Group | Texas Roadhouse vs. Siamgas And Petrochemicals | Texas Roadhouse vs. PPHE HOTEL GROUP | Texas Roadhouse vs. MELIA HOTELS |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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