Correlation Between TEXAS ROADHOUSE and Halliburton

Can any of the company-specific risk be diversified away by investing in both TEXAS ROADHOUSE and Halliburton 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 Halliburton into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TEXAS ROADHOUSE and Halliburton, you can compare the effects of market volatilities on TEXAS ROADHOUSE and Halliburton 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 Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of TEXAS ROADHOUSE and Halliburton.

Diversification Opportunities for TEXAS ROADHOUSE and Halliburton

0.59

Correlation Coefficient

TEXAS ROADHOUSE  Halliburton

Very weak diversification

The 3 months correlation between TEXAS and Halliburton is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding TEXAS ROADHOUSE and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton 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 Halliburton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halliburton has no effect on the direction of TEXAS ROADHOUSE i.e., TEXAS ROADHOUSE and Halliburton go up and down completely randomly.

Pair Corralation between TEXAS ROADHOUSE and Halliburton

Assuming the 90 days trading horizon TEXAS ROADHOUSE is expected to generate 0.96 times more return on investment than Halliburton. However, TEXAS ROADHOUSE is 1.04 times less risky than Halliburton. It trades about -0.29 of its potential returns per unit of risk. Halliburton is currently generating about -0.42 per unit of risk. If you would invest  19,172  in TEXAS ROADHOUSE on September 29, 2024 and sell it today you would lose (1,742) from holding TEXAS ROADHOUSE or give up 9.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

TEXAS ROADHOUSE  vs.  Halliburton

TEXAS ROADHOUSE

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TEXAS ROADHOUSE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, TEXAS ROADHOUSE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Halliburton

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Halliburton are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Halliburton is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with TEXAS ROADHOUSE and Halliburton

The main advantage of trading using opposite TEXAS ROADHOUSE and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TEXAS ROADHOUSE position performs unexpectedly, Halliburton 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 Halliburton will offset losses from the drop in Halliburton's long position.

The idea behind TEXAS ROADHOUSE and Halliburton 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.