Correlation Between Kaufman Broad and Texas Roadhouse

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

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

Diversification Opportunities for Kaufman Broad and Texas Roadhouse

0.58

Correlation Coefficient

Kaufman Broad  Texas Roadhouse

Very weak diversification

The 3 months correlation between Kaufman and Texas is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kaufman Broad SA and Texas Roadhouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Roadhouse and Kaufman Broad 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 Kaufman Broad SA 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 Kaufman Broad i.e., Kaufman Broad and Texas Roadhouse go up and down completely randomly.

Pair Corralation between Kaufman Broad and Texas Roadhouse

Assuming the 90 days horizon Kaufman Broad is expected to generate 2.02 times less return on investment than Texas Roadhouse. But when comparing it to its historical volatility, Kaufman Broad SA is 1.19 times less risky than Texas Roadhouse. It trades about 0.09 of its potential returns per unit of risk. Texas Roadhouse is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  14,135  in Texas Roadhouse on March 18, 2025 and sell it today you would earn a total of  1,710  from holding Texas Roadhouse or generate 12.1% return on investment over 90 days.

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

Kaufman Broad SA  vs.  Texas Roadhouse

Kaufman Broad SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kaufman Broad SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Kaufman Broad may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Texas Roadhouse

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Texas Roadhouse are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Texas Roadhouse is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Kaufman Broad and Texas Roadhouse

The main advantage of trading using opposite Kaufman Broad and Texas Roadhouse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaufman Broad 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 Kaufman Broad SA 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.