Correlation Between ENIIM and Texas Roadhouse

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

By analyzing existing cross correlation between ENIIM 425 09 MAY 29 and Texas Roadhouse, you can compare the effects of market volatilities on ENIIM 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 ENIIM with a short position of Texas Roadhouse. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENIIM and Texas Roadhouse.

Diversification Opportunities for ENIIM and Texas Roadhouse

0.31

Correlation Coefficient

ENIIM  Texas Roadhouse

Weak diversification

The 3 months correlation between ENIIM and Texas is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding ENIIM 425 09 MAY 29 and Texas Roadhouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Roadhouse and ENIIM 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 ENIIM 425 09 MAY 29 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 ENIIM i.e., ENIIM and Texas Roadhouse go up and down completely randomly.

Pair Corralation between ENIIM and Texas Roadhouse

Assuming the 90 days trading horizon ENIIM is expected to generate 1.09 times less return on investment than Texas Roadhouse. In addition to that, ENIIM is 1.26 times more volatile than Texas Roadhouse. It trades about 0.03 of its total potential returns per unit of risk. Texas Roadhouse is currently generating about 0.04 per unit of volatility. If you would invest  16,920  in Texas Roadhouse on September 29, 2024 and sell it today you would earn a total of  1,266  from holding Texas Roadhouse or generate 7.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	49.21%
Values	Daily Returns

ENIIM 425 09 MAY 29  vs.  Texas Roadhouse

ENIIM 425 09

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ENIIM 425 09 MAY 29 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ENIIM is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Texas Roadhouse

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Texas Roadhouse are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Texas Roadhouse is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with ENIIM and Texas Roadhouse

The main advantage of trading using opposite ENIIM and Texas Roadhouse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENIIM 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.

The idea behind ENIIM 425 09 MAY 29 and Texas Roadhouse 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.