Correlation Between Anglo American and Rave Restaurant
Can any of the company-specific risk be diversified away by investing in both Anglo American and Rave Restaurant 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 Anglo American and Rave Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anglo American Platinum and Rave Restaurant Group, you can compare the effects of market volatilities on Anglo American and Rave Restaurant 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 Anglo American with a short position of Rave Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo American and Rave Restaurant.
Diversification Opportunities for Anglo American and Rave Restaurant
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Anglo and Rave is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American Platinum and Rave Restaurant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rave Restaurant Group and Anglo American 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 Anglo American Platinum are associated (or correlated) with Rave Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rave Restaurant Group has no effect on the direction of Anglo American i.e., Anglo American and Rave Restaurant go up and down completely randomly.
Pair Corralation between Anglo American and Rave Restaurant
Assuming the 90 days horizon Anglo American Platinum is expected to under-perform the Rave Restaurant. In addition to that, Anglo American is 1.59 times more volatile than Rave Restaurant Group. It trades about -0.23 of its total potential returns per unit of risk. Rave Restaurant Group is currently generating about 0.07 per unit of volatility. If you would invest 291.00 in Rave Restaurant Group on September 1, 2024 and sell it today you would earn a total of 10.00 from holding Rave Restaurant Group or generate 3.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anglo American Platinum vs. Rave Restaurant Group
Performance |
| Timeline |
| Anglo American Platinum |
| Rave Restaurant Group |
Anglo American and Rave Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anglo American and Rave Restaurant
The main advantage of trading using opposite Anglo American and Rave Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo American position performs unexpectedly, Rave Restaurant 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 Rave Restaurant will offset losses from the drop in Rave Restaurant's long position.| Anglo American vs. Defiance Silver Corp | Anglo American vs. HUMANA INC | Anglo American vs. SCOR PK | Anglo American vs. Aquagold International |
| Rave Restaurant vs. Ark Restaurants Corp | Rave Restaurant vs. One Group Hospitality | Rave Restaurant vs. Flanigans Enterprises | Rave Restaurant vs. Noble Romans |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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