Correlation Between Rave Restaurant and One Group
Can any of the company-specific risk be diversified away by investing in both Rave Restaurant and One Group 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 One Group 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 One Group Hospitality, you can compare the effects of market volatilities on Rave Restaurant and One Group 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 One Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rave Restaurant and One Group.
Diversification Opportunities for Rave Restaurant and One Group
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rave and One is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Rave Restaurant Group and One Group Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Group Hospitality 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 One Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Group Hospitality has no effect on the direction of Rave Restaurant i.e., Rave Restaurant and One Group go up and down completely randomly.
Pair Corralation between Rave Restaurant and One Group
Given the investment horizon of 90 days Rave Restaurant is expected to generate 2.51 times less return on investment than One Group. But when comparing it to its historical volatility, Rave Restaurant Group is 1.72 times less risky than One Group. It trades about 0.02 of its potential returns per unit of risk. One Group Hospitality is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 352.00 in One Group Hospitality on August 28, 2024 and sell it today you would earn a total of 1.00 from holding One Group Hospitality or generate 0.28% 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. One Group Hospitality
Performance |
| Timeline |
| Rave Restaurant Group |
| One Group Hospitality |
Rave Restaurant and One Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rave Restaurant and One Group
The main advantage of trading using opposite Rave Restaurant and One Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rave Restaurant position performs unexpectedly, One Group 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 One Group will offset losses from the drop in One Group'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 |
| One Group vs. FAT Brands | One Group vs. Potbelly Co | One Group vs. BJs Restaurants | One Group 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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