Correlation Between AutoNation and Rave Restaurant
Can any of the company-specific risk be diversified away by investing in both AutoNation 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 AutoNation and Rave Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AutoNation and Rave Restaurant Group, you can compare the effects of market volatilities on AutoNation 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 AutoNation with a short position of Rave Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of AutoNation and Rave Restaurant.
Diversification Opportunities for AutoNation and Rave Restaurant
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AutoNation and Rave is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding AutoNation 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 AutoNation 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 AutoNation 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 AutoNation i.e., AutoNation and Rave Restaurant go up and down completely randomly.
Pair Corralation between AutoNation and Rave Restaurant
Allowing for the 90-day total investment horizon AutoNation is expected to generate 1.3 times less return on investment than Rave Restaurant. But when comparing it to its historical volatility, AutoNation is 1.46 times less risky than Rave Restaurant. It trades about 0.06 of its potential returns per unit of risk. Rave Restaurant Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 165.00 in Rave Restaurant Group on August 28, 2024 and sell it today you would earn a total of 116.00 from holding Rave Restaurant Group or generate 70.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AutoNation vs. Rave Restaurant Group
Performance |
| Timeline |
| AutoNation |
| Rave Restaurant Group |
AutoNation and Rave Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AutoNation and Rave Restaurant
The main advantage of trading using opposite AutoNation and Rave Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AutoNation 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.| AutoNation vs. Kingsway Financial Services | AutoNation vs. KAR Auction Services | AutoNation vs. Cango Inc | AutoNation vs. Vroom Inc |
| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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