Correlation Between Rave Restaurant and GEN Restaurant
Can any of the company-specific risk be diversified away by investing in both Rave Restaurant and GEN 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 Rave Restaurant and GEN Restaurant 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 GEN Restaurant Group,, you can compare the effects of market volatilities on Rave Restaurant and GEN 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 Rave Restaurant with a short position of GEN Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rave Restaurant and GEN Restaurant.
Diversification Opportunities for Rave Restaurant and GEN Restaurant
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Rave and GEN is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Rave Restaurant Group and GEN Restaurant Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEN Restaurant Group, 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 GEN Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEN Restaurant Group, has no effect on the direction of Rave Restaurant i.e., Rave Restaurant and GEN Restaurant go up and down completely randomly.
Pair Corralation between Rave Restaurant and GEN Restaurant
Given the investment horizon of 90 days Rave Restaurant Group is expected to generate 0.6 times more return on investment than GEN Restaurant. However, Rave Restaurant Group is 1.66 times less risky than GEN Restaurant. It trades about 0.08 of its potential returns per unit of risk. GEN Restaurant Group, is currently generating about -0.07 per unit of risk. If you would invest 280.00 in Rave Restaurant Group on August 29, 2024 and sell it today you would earn a total of 12.00 from holding Rave Restaurant Group or generate 4.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rave Restaurant Group vs. GEN Restaurant Group,
Performance |
| Timeline |
| Rave Restaurant Group |
| GEN Restaurant Group, |
Rave Restaurant and GEN Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rave Restaurant and GEN Restaurant
The main advantage of trading using opposite Rave Restaurant and GEN Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rave Restaurant position performs unexpectedly, GEN 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 GEN Restaurant will offset losses from the drop in GEN Restaurant'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 |
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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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