Correlation Between Texas Roadhouse and Playtika Holding

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

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

Diversification Opportunities for Texas Roadhouse and Playtika Holding

-0.14

Correlation Coefficient

Texas Roadhouse  Playtika Holding

Good diversification

The 3 months correlation between Texas and Playtika is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Texas Roadhouse and Playtika Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtika Holding Corp 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 Playtika Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtika Holding Corp has no effect on the direction of Texas Roadhouse i.e., Texas Roadhouse and Playtika Holding go up and down completely randomly.

Pair Corralation between Texas Roadhouse and Playtika Holding

Given the investment horizon of 90 days Texas Roadhouse is expected to generate 0.83 times more return on investment than Playtika Holding. However, Texas Roadhouse is 1.21 times less risky than Playtika Holding. It trades about 0.41 of its potential returns per unit of risk. Playtika Holding Corp is currently generating about 0.32 per unit of risk. If you would invest  15,019  in Texas Roadhouse on February 6, 2024 and sell it today you would earn a total of  1,780  from holding Texas Roadhouse or generate 11.85% return on investment over 90 days.

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

Texas Roadhouse  vs.  Playtika Holding Corp

Texas Roadhouse

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Texas Roadhouse are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Texas Roadhouse demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Playtika Holding Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Playtika Holding Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Playtika Holding may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Texas Roadhouse and Playtika Holding

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

The idea behind Texas Roadhouse and Playtika Holding Corp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.