Correlation Between Texas Roadhouse and Aim Treasurers

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

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

Diversification Opportunities for Texas Roadhouse and Aim Treasurers

0.8

Correlation Coefficient

Texas Roadhouse  Aim Treasurers

Very poor diversification

The 3 months correlation between Texas and Aim is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Texas Roadhouse and Aim Treasurers Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aim Treasurers Series 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 Aim Treasurers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aim Treasurers Series has no effect on the direction of Texas Roadhouse i.e., Texas Roadhouse and Aim Treasurers go up and down completely randomly.

Pair Corralation between Texas Roadhouse and Aim Treasurers

Given the investment horizon of 90 days Texas Roadhouse is expected to generate 11.45 times more return on investment than Aim Treasurers. However, Texas Roadhouse is 11.45 times more volatile than Aim Treasurers Series. It trades about 0.27 of its potential returns per unit of risk. Aim Treasurers Series is currently generating about 0.13 per unit of risk. If you would invest  9,684  in Texas Roadhouse on January 25, 2024 and sell it today you would earn a total of  5,992  from holding Texas Roadhouse or generate 61.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Texas Roadhouse  vs.  Aim Treasurers Series

Texas Roadhouse

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Texas Roadhouse are ranked lower than 18 (%) 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.

Aim Treasurers Series

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aim Treasurers Series are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Aim Treasurers 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 Aim Treasurers

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

The idea behind Texas Roadhouse and Aim Treasurers Series 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.