Correlation Between Grocery Outlet and RCI Hospitality
Can any of the company-specific risk be diversified away by investing in both Grocery Outlet 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 Grocery Outlet and RCI Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grocery Outlet Holding and RCI Hospitality Holdings, you can compare the effects of market volatilities on Grocery Outlet 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 Grocery Outlet with a short position of RCI Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and RCI Hospitality.
Diversification Opportunities for Grocery Outlet and RCI Hospitality
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Grocery and RCI is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding 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 Grocery Outlet 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 Grocery Outlet Holding 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 Grocery Outlet i.e., Grocery Outlet and RCI Hospitality go up and down completely randomly.
Pair Corralation between Grocery Outlet and RCI Hospitality
Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to generate 1.4 times more return on investment than RCI Hospitality. However, Grocery Outlet is 1.4 times more volatile than RCI Hospitality Holdings. It trades about 0.5 of its potential returns per unit of risk. RCI Hospitality Holdings is currently generating about 0.34 per unit of risk. If you would invest 1,430 in Grocery Outlet Holding on September 1, 2024 and sell it today you would earn a total of 670.00 from holding Grocery Outlet Holding or generate 46.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grocery Outlet Holding vs. RCI Hospitality Holdings
Performance |
| Timeline |
| Grocery Outlet Holding |
| RCI Hospitality Holdings |
Grocery Outlet and RCI Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grocery Outlet and RCI Hospitality
The main advantage of trading using opposite Grocery Outlet and RCI Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet 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.| Grocery Outlet vs. Natural Grocers by | Grocery Outlet vs. Village Super Market | Grocery Outlet vs. Ingles Markets Incorporated | Grocery Outlet vs. Ocado Group plc |
| RCI Hospitality vs. Brinker International | RCI Hospitality vs. Bloomin Brands | RCI Hospitality vs. BJs Restaurants | RCI Hospitality vs. Dennys Corp |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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