Correlation Between Rave Restaurant and ImpediMed
Can any of the company-specific risk be diversified away by investing in both Rave Restaurant and ImpediMed 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 ImpediMed 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 ImpediMed Limited, you can compare the effects of market volatilities on Rave Restaurant and ImpediMed 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 ImpediMed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rave Restaurant and ImpediMed.
Diversification Opportunities for Rave Restaurant and ImpediMed
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Rave and ImpediMed is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Rave Restaurant Group and ImpediMed Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ImpediMed Limited 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 ImpediMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ImpediMed Limited has no effect on the direction of Rave Restaurant i.e., Rave Restaurant and ImpediMed go up and down completely randomly.
Pair Corralation between Rave Restaurant and ImpediMed
Given the investment horizon of 90 days Rave Restaurant is expected to generate 10.86 times less return on investment than ImpediMed. But when comparing it to its historical volatility, Rave Restaurant Group is 6.23 times less risky than ImpediMed. It trades about 0.04 of its potential returns per unit of risk. ImpediMed Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 7.60 in ImpediMed Limited on September 14, 2024 and sell it today you would lose (3.39) from holding ImpediMed Limited or give up 44.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Rave Restaurant Group vs. ImpediMed Limited
Performance |
| Timeline |
| Rave Restaurant Group |
| ImpediMed Limited |
Rave Restaurant and ImpediMed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rave Restaurant and ImpediMed
The main advantage of trading using opposite Rave Restaurant and ImpediMed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rave Restaurant position performs unexpectedly, ImpediMed 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 ImpediMed will offset losses from the drop in ImpediMed'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 |
| ImpediMed vs. Yuexiu Transport Infrastructure | ImpediMed vs. Rave Restaurant Group | ImpediMed vs. Cumulus Media Class | ImpediMed vs. TFI International |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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