Correlation Between Rave Restaurant and Almacenes Xito
Can any of the company-specific risk be diversified away by investing in both Rave Restaurant and Almacenes Xito 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 Rave Restaurant and Almacenes Xito into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rave Restaurant Group and Almacenes xito SA, you can compare the effects of market volatilities on Rave Restaurant and Almacenes Xito 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 Rave Restaurant with a short position of Almacenes Xito. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rave Restaurant and Almacenes Xito.
Diversification Opportunities for Rave Restaurant and Almacenes Xito
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Rave and Almacenes is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Rave Restaurant Group and Almacenes xito SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Almacenes xito SA and Rave Restaurant 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 Rave Restaurant Group are associated (or correlated) with Almacenes Xito. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Almacenes xito SA has no effect on the direction of Rave Restaurant i.e., Rave Restaurant and Almacenes Xito go up and down completely randomly.
Pair Corralation between Rave Restaurant and Almacenes Xito
Given the investment horizon of 90 days Rave Restaurant Group is expected to generate 0.62 times more return on investment than Almacenes Xito. However, Rave Restaurant Group is 1.6 times less risky than Almacenes Xito. It trades about -0.07 of its potential returns per unit of risk. Almacenes xito SA is currently generating about -0.06 per unit of risk. If you would invest 285.00 in Rave Restaurant Group on October 22, 2024 and sell it today you would lose (23.00) from holding Rave Restaurant Group or give up 8.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rave Restaurant Group vs. Almacenes xito SA
Performance |
| Timeline |
| Rave Restaurant Group |
| Almacenes xito SA |
Rave Restaurant and Almacenes Xito Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rave Restaurant and Almacenes Xito
The main advantage of trading using opposite Rave Restaurant and Almacenes Xito positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rave Restaurant position performs unexpectedly, Almacenes Xito 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 Almacenes Xito will offset losses from the drop in Almacenes Xito's long position.| Rave Restaurant vs. Ark Restaurants Corp | Rave Restaurant vs. One Group Hospitality | Rave Restaurant vs. Flanigans Enterprises | Rave Restaurant vs. Noble Romans |
| Almacenes Xito vs. Hochschild Mining PLC | Almacenes Xito vs. Rave Restaurant Group | Almacenes Xito vs. Chipotle Mexican Grill | Almacenes Xito vs. Games Workshop Group |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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