Correlation Between TEXAS ROADHOUSE and FIRST SHIP

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

By analyzing existing cross correlation between TEXAS ROADHOUSE and FIRST SHIP LEASE, you can compare the effects of market volatilities on TEXAS ROADHOUSE and FIRST SHIP 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 FIRST SHIP. Check out your portfolio center. Please also check ongoing floating volatility patterns of TEXAS ROADHOUSE and FIRST SHIP.

Diversification Opportunities for TEXAS ROADHOUSE and FIRST SHIP

0.25

Correlation Coefficient

TEXAS ROADHOUSE  FIRST SHIP

Modest diversification

The 3 months correlation between TEXAS and FIRST is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding TEXAS ROADHOUSE and FIRST SHIP LEASE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST SHIP LEASE 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 FIRST SHIP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST SHIP LEASE has no effect on the direction of TEXAS ROADHOUSE i.e., TEXAS ROADHOUSE and FIRST SHIP go up and down completely randomly.

Pair Corralation between TEXAS ROADHOUSE and FIRST SHIP

Assuming the 90 days trading horizon TEXAS ROADHOUSE is expected to generate 0.62 times more return on investment than FIRST SHIP. However, TEXAS ROADHOUSE is 1.6 times less risky than FIRST SHIP. It trades about 0.12 of its potential returns per unit of risk. FIRST SHIP LEASE is currently generating about 0.04 per unit of risk. If you would invest  13,697  in TEXAS ROADHOUSE on April 21, 2025 and sell it today you would earn a total of  1,968  from holding TEXAS ROADHOUSE or generate 14.37% return on investment over 90 days.

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

TEXAS ROADHOUSE  vs.  FIRST SHIP LEASE

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. In spite of rather uncertain basic indicators, TEXAS ROADHOUSE exhibited solid returns over the last few months and may actually be approaching a breakup point.

FIRST SHIP LEASE

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FIRST SHIP LEASE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FIRST SHIP may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with TEXAS ROADHOUSE and FIRST SHIP

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

The idea behind TEXAS ROADHOUSE and FIRST SHIP LEASE 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 Transaction History module to view history of all your transactions and understand their impact on performance.