Correlation Between Texas Roadhouse and HUNTINGTON

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

By analyzing existing cross correlation between Texas Roadhouse and HUNTINGTON INGALLS INDS, you can compare the effects of market volatilities on Texas Roadhouse and HUNTINGTON 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 HUNTINGTON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Texas Roadhouse and HUNTINGTON.

Diversification Opportunities for Texas Roadhouse and HUNTINGTON

-0.65

Correlation Coefficient

Texas Roadhouse  HUNTINGTON

Excellent diversification

The 3 months correlation between Texas and HUNTINGTON is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Texas Roadhouse and HUNTINGTON INGALLS INDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUNTINGTON INGALLS INDS 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 HUNTINGTON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUNTINGTON INGALLS INDS has no effect on the direction of Texas Roadhouse i.e., Texas Roadhouse and HUNTINGTON go up and down completely randomly.

Pair Corralation between Texas Roadhouse and HUNTINGTON

Given the investment horizon of 90 days Texas Roadhouse is expected to generate 2.75 times more return on investment than HUNTINGTON. However, Texas Roadhouse is 2.75 times more volatile than HUNTINGTON INGALLS INDS. It trades about 0.21 of its potential returns per unit of risk. HUNTINGTON INGALLS INDS is currently generating about -0.07 per unit of risk. If you would invest  16,608  in Texas Roadhouse on September 3, 2024 and sell it today you would earn a total of  3,919  from holding Texas Roadhouse or generate 23.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	87.5%
Values	Daily Returns

Texas Roadhouse  vs.  HUNTINGTON INGALLS INDS

Texas Roadhouse

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Texas Roadhouse are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Texas Roadhouse demonstrated solid returns over the last few months and may actually be approaching a breakup point.

HUNTINGTON INGALLS INDS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HUNTINGTON INGALLS INDS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HUNTINGTON is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Texas Roadhouse and HUNTINGTON

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

The idea behind Texas Roadhouse and HUNTINGTON INGALLS INDS 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.