Correlation Between Cracker Barrel and RCI Hospitality
Can any of the company-specific risk be diversified away by investing in both Cracker Barrel 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 Cracker Barrel and RCI Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cracker Barrel Old and RCI Hospitality Holdings, you can compare the effects of market volatilities on Cracker Barrel 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 Cracker Barrel with a short position of RCI Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cracker Barrel and RCI Hospitality.
Diversification Opportunities for Cracker Barrel and RCI Hospitality
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cracker and RCI is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Cracker Barrel Old 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 Cracker Barrel 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 Cracker Barrel Old 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 Cracker Barrel i.e., Cracker Barrel and RCI Hospitality go up and down completely randomly.
Pair Corralation between Cracker Barrel and RCI Hospitality
Given the investment horizon of 90 days Cracker Barrel Old is expected to generate 2.17 times more return on investment than RCI Hospitality. However, Cracker Barrel is 2.17 times more volatile than RCI Hospitality Holdings. It trades about 0.1 of its potential returns per unit of risk. RCI Hospitality Holdings is currently generating about -0.29 per unit of risk. If you would invest 5,190 in Cracker Barrel Old on October 20, 2024 and sell it today you would earn a total of 283.00 from holding Cracker Barrel Old or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cracker Barrel Old vs. RCI Hospitality Holdings
Performance |
| Timeline |
| Cracker Barrel Old |
| RCI Hospitality Holdings |
Cracker Barrel and RCI Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cracker Barrel and RCI Hospitality
The main advantage of trading using opposite Cracker Barrel and RCI Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cracker Barrel 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.| Cracker Barrel vs. Brinker International | Cracker Barrel vs. BJs Restaurants | Cracker Barrel vs. Texas Roadhouse | Cracker Barrel vs. Papa Johns International |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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