Correlation Between PATTIES FOODS and Texas Roadhouse

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

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

Diversification Opportunities for PATTIES FOODS and Texas Roadhouse

0.34

Correlation Coefficient

PATTIES FOODS  Texas Roadhouse

Weak diversification

The 3 months correlation between PATTIES and Texas is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding PATTIES FOODS and Texas Roadhouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Roadhouse and PATTIES FOODS 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 PATTIES FOODS 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 PATTIES FOODS i.e., PATTIES FOODS and Texas Roadhouse go up and down completely randomly.

Pair Corralation between PATTIES FOODS and Texas Roadhouse

Assuming the 90 days horizon PATTIES FOODS is expected to generate 2.81 times more return on investment than Texas Roadhouse. However, PATTIES FOODS is 2.81 times more volatile than Texas Roadhouse. It trades about 0.29 of its potential returns per unit of risk. Texas Roadhouse is currently generating about 0.13 per unit of risk. If you would invest  31.00  in PATTIES FOODS on April 21, 2025 and sell it today you would earn a total of  42.00  from holding PATTIES FOODS or generate 135.48% return on investment over 90 days.

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

PATTIES FOODS   vs.  Texas Roadhouse

PATTIES FOODS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PATTIES FOODS are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PATTIES FOODS reported solid returns over the last few months and may actually be approaching a breakup point.

Texas Roadhouse

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Texas Roadhouse are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Texas Roadhouse reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PATTIES FOODS and Texas Roadhouse

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

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.