Correlation Between Texas Roadhouse and UBEX

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

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

Diversification Opportunities for Texas Roadhouse and UBEX

-0.7

Correlation Coefficient

Texas Roadhouse  UBEX

Excellent diversification

The 3 months correlation between Texas and UBEX is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Texas Roadhouse and UBEX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBEX 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 UBEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBEX has no effect on the direction of Texas Roadhouse i.e., Texas Roadhouse and UBEX go up and down completely randomly.

Pair Corralation between Texas Roadhouse and UBEX

Given the investment horizon of 90 days Texas Roadhouse is expected to generate 3.11 times less return on investment than UBEX. But when comparing it to its historical volatility, Texas Roadhouse is 10.91 times less risky than UBEX. It trades about 0.24 of its potential returns per unit of risk. UBEX is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.00  in UBEX on January 26, 2024 and sell it today you would lose  0.00  from holding UBEX or give up 28.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

Texas Roadhouse  vs.  UBEX

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 weak basic indicators, Texas Roadhouse demonstrated solid returns over the last few months and may actually be approaching a breakup point.

UBEX

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in UBEX are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, UBEX exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Texas Roadhouse and UBEX

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

The idea behind Texas Roadhouse and UBEX 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.