Correlation Between Noodles and Ruths Hospitality
Can any of the company-specific risk be diversified away by investing in both Noodles and Ruths 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 Noodles and Ruths Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Noodles Company and Ruths Hospitality Group, you can compare the effects of market volatilities on Noodles and Ruths 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 Noodles with a short position of Ruths Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noodles and Ruths Hospitality.
Diversification Opportunities for Noodles and Ruths Hospitality
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Noodles and Ruths is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Noodles Company and Ruths Hospitality Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruths Hospitality and Noodles 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 Noodles Company are associated (or correlated) with Ruths Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ruths Hospitality has no effect on the direction of Noodles i.e., Noodles and Ruths Hospitality go up and down completely randomly.
Pair Corralation between Noodles and Ruths Hospitality
If you would invest 2,149 in Ruths Hospitality Group on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Ruths Hospitality Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Noodles Company vs. Ruths Hospitality Group
Performance |
| Timeline |
| Noodles Company |
| Ruths Hospitality |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Noodles and Ruths Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Noodles and Ruths Hospitality
The main advantage of trading using opposite Noodles and Ruths Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Noodles position performs unexpectedly, Ruths 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 Ruths Hospitality will offset losses from the drop in Ruths Hospitality's long position.The idea behind Noodles Company and Ruths Hospitality Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Ruths Hospitality vs. Dine Brands Global | Ruths Hospitality vs. Bloomin Brands | Ruths Hospitality vs. BJs Restaurants | Ruths Hospitality vs. The Cheesecake Factory |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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