Correlation Between SPROUTS FARMERS and RCI Hospitality
Can any of the company-specific risk be diversified away by investing in both SPROUTS FARMERS and RCI Hospitality 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 SPROUTS FARMERS and RCI Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPROUTS FARMERS MKT and RCI Hospitality Holdings, you can compare the effects of market volatilities on SPROUTS FARMERS and RCI Hospitality 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 SPROUTS FARMERS with a short position of RCI Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPROUTS FARMERS and RCI Hospitality.
Diversification Opportunities for SPROUTS FARMERS and RCI Hospitality
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SPROUTS and RCI is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding SPROUTS FARMERS MKT and RCI Hospitality Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCI Hospitality Holdings and SPROUTS FARMERS 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 SPROUTS FARMERS MKT are associated (or correlated) with RCI Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCI Hospitality Holdings has no effect on the direction of SPROUTS FARMERS i.e., SPROUTS FARMERS and RCI Hospitality go up and down completely randomly.
Pair Corralation between SPROUTS FARMERS and RCI Hospitality
Assuming the 90 days trading horizon SPROUTS FARMERS MKT is expected to generate 1.15 times more return on investment than RCI Hospitality. However, SPROUTS FARMERS is 1.15 times more volatile than RCI Hospitality Holdings. It trades about 0.52 of its potential returns per unit of risk. RCI Hospitality Holdings is currently generating about -0.07 per unit of risk. If you would invest 13,020 in SPROUTS FARMERS MKT on November 7, 2024 and sell it today you would earn a total of 3,050 from holding SPROUTS FARMERS MKT or generate 23.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
SPROUTS FARMERS MKT vs. RCI Hospitality Holdings
Performance |
| Timeline |
| SPROUTS FARMERS MKT |
| RCI Hospitality Holdings |
SPROUTS FARMERS and RCI Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPROUTS FARMERS and RCI Hospitality
The main advantage of trading using opposite SPROUTS FARMERS and RCI Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPROUTS FARMERS position performs unexpectedly, RCI Hospitality 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 RCI Hospitality will offset losses from the drop in RCI Hospitality's long position.| SPROUTS FARMERS vs. Apple Inc | SPROUTS FARMERS vs. Apple Inc | SPROUTS FARMERS vs. Apple Inc | SPROUTS FARMERS vs. Apple Inc |
| RCI Hospitality vs. Air Transport Services | RCI Hospitality vs. Direct Line Insurance | RCI Hospitality vs. BANK OF CHINA | RCI Hospitality vs. UNIQA INSURANCE GR |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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