Correlation Between Rave Restaurant and New Horizon
Can any of the company-specific risk be diversified away by investing in both Rave Restaurant and New Horizon 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 New Horizon 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 New Horizon Aircraft, you can compare the effects of market volatilities on Rave Restaurant and New Horizon 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 New Horizon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rave Restaurant and New Horizon.
Diversification Opportunities for Rave Restaurant and New Horizon
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rave and New is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Rave Restaurant Group and New Horizon Aircraft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Horizon Aircraft 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 New Horizon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Horizon Aircraft has no effect on the direction of Rave Restaurant i.e., Rave Restaurant and New Horizon go up and down completely randomly.
Pair Corralation between Rave Restaurant and New Horizon
Given the investment horizon of 90 days Rave Restaurant Group is expected to generate 0.35 times more return on investment than New Horizon. However, Rave Restaurant Group is 2.83 times less risky than New Horizon. It trades about 0.06 of its potential returns per unit of risk. New Horizon Aircraft is currently generating about -0.03 per unit of risk. If you would invest 141.00 in Rave Restaurant Group on September 12, 2024 and sell it today you would earn a total of 160.00 from holding Rave Restaurant Group or generate 113.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.26% |
| Values | Daily Returns |
Rave Restaurant Group vs. New Horizon Aircraft
Performance |
| Timeline |
| Rave Restaurant Group |
| New Horizon Aircraft |
Rave Restaurant and New Horizon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rave Restaurant and New Horizon
The main advantage of trading using opposite Rave Restaurant and New Horizon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rave Restaurant position performs unexpectedly, New Horizon 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 New Horizon will offset losses from the drop in New Horizon'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 |
| New Horizon vs. Cracker Barrel Old | New Horizon vs. Dominos Pizza | New Horizon vs. SEI Investments | New Horizon vs. Rave Restaurant 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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