Correlation Between Rave Restaurant and Oak Woods
Can any of the company-specific risk be diversified away by investing in both Rave Restaurant and Oak Woods 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 Oak Woods 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 Oak Woods Acquisition, you can compare the effects of market volatilities on Rave Restaurant and Oak Woods 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 Oak Woods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rave Restaurant and Oak Woods.
Diversification Opportunities for Rave Restaurant and Oak Woods
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Rave and Oak is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Rave Restaurant Group and Oak Woods Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oak Woods Acquisition 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 Oak Woods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oak Woods Acquisition has no effect on the direction of Rave Restaurant i.e., Rave Restaurant and Oak Woods go up and down completely randomly.
Pair Corralation between Rave Restaurant and Oak Woods
Given the investment horizon of 90 days Rave Restaurant is expected to generate 7.02 times less return on investment than Oak Woods. But when comparing it to its historical volatility, Rave Restaurant Group is 5.33 times less risky than Oak Woods. It trades about 0.05 of its potential returns per unit of risk. Oak Woods Acquisition is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Oak Woods Acquisition on September 14, 2024 and sell it today you would earn a total of 0.00 from holding Oak Woods Acquisition or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rave Restaurant Group vs. Oak Woods Acquisition
Performance |
| Timeline |
| Rave Restaurant Group |
| Oak Woods Acquisition |
Rave Restaurant and Oak Woods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rave Restaurant and Oak Woods
The main advantage of trading using opposite Rave Restaurant and Oak Woods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rave Restaurant position performs unexpectedly, Oak Woods 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 Oak Woods will offset losses from the drop in Oak Woods' long position.| Rave Restaurant vs. Ark Restaurants Corp | Rave Restaurant vs. One Group Hospitality | Rave Restaurant vs. Flanigans Enterprises | Rave Restaurant vs. Noble Romans |
| Oak Woods vs. Barings BDC | Oak Woods vs. Franklin Wireless Corp | Oak Woods vs. Skechers USA | Oak Woods vs. Chiba Bank Ltd |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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