Correlation Between Rave Restaurant and Skechers USA
Can any of the company-specific risk be diversified away by investing in both Rave Restaurant and Skechers USA 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 Skechers USA 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 Skechers USA, you can compare the effects of market volatilities on Rave Restaurant and Skechers USA 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 Skechers USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rave Restaurant and Skechers USA.
Diversification Opportunities for Rave Restaurant and Skechers USA
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rave and Skechers is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Rave Restaurant Group and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA 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 Skechers USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skechers USA has no effect on the direction of Rave Restaurant i.e., Rave Restaurant and Skechers USA go up and down completely randomly.
Pair Corralation between Rave Restaurant and Skechers USA
Given the investment horizon of 90 days Rave Restaurant Group is expected to generate 1.65 times more return on investment than Skechers USA. However, Rave Restaurant is 1.65 times more volatile than Skechers USA. It trades about 0.05 of its potential returns per unit of risk. Skechers USA is currently generating about 0.05 per unit of risk. If you would invest 205.00 in Rave Restaurant Group on September 12, 2024 and sell it today you would earn a total of 96.00 from holding Rave Restaurant Group or generate 46.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rave Restaurant Group vs. Skechers USA
Performance |
| Timeline |
| Rave Restaurant Group |
| Skechers USA |
Rave Restaurant and Skechers USA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rave Restaurant and Skechers USA
The main advantage of trading using opposite Rave Restaurant and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rave Restaurant position performs unexpectedly, Skechers USA 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 Skechers USA will offset losses from the drop in Skechers USA'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 |
| Skechers USA vs. Crocs Inc | Skechers USA vs. On Holding | Skechers USA vs. Nike Inc | Skechers USA vs. Designer Brands |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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