Correlation Between Kura Sushi and Rave Restaurant
Can any of the company-specific risk be diversified away by investing in both Kura Sushi 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 Kura Sushi and Rave Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kura Sushi USA and Rave Restaurant Group, you can compare the effects of market volatilities on Kura Sushi 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 Kura Sushi with a short position of Rave Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kura Sushi and Rave Restaurant.
Diversification Opportunities for Kura Sushi and Rave Restaurant
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kura and Rave is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kura Sushi USA 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 Kura Sushi 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 Kura Sushi USA 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 Kura Sushi i.e., Kura Sushi and Rave Restaurant go up and down completely randomly.
Pair Corralation between Kura Sushi and Rave Restaurant
Given the investment horizon of 90 days Kura Sushi USA is expected to generate 1.53 times more return on investment than Rave Restaurant. However, Kura Sushi is 1.53 times more volatile than Rave Restaurant Group. It trades about 0.11 of its potential returns per unit of risk. Rave Restaurant Group is currently generating about 0.02 per unit of risk. If you would invest 9,450 in Kura Sushi USA on August 25, 2024 and sell it today you would earn a total of 919.00 from holding Kura Sushi USA or generate 9.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kura Sushi USA vs. Rave Restaurant Group
Performance |
| Timeline |
| Kura Sushi USA |
| Rave Restaurant Group |
Kura Sushi and Rave Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kura Sushi and Rave Restaurant
The main advantage of trading using opposite Kura Sushi and Rave Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kura Sushi 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.| Kura Sushi vs. Brinker International | Kura Sushi vs. Dennys Corp | Kura Sushi vs. Bloomin Brands | Kura Sushi vs. Jack In The |
| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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