Correlation Between RCI Hospitality and ARB
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and ARB 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 RCI Hospitality and ARB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCI Hospitality Holdings and ARB Limited, you can compare the effects of market volatilities on RCI Hospitality and ARB 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 RCI Hospitality with a short position of ARB. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and ARB.
Diversification Opportunities for RCI Hospitality and ARB
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between RCI and ARB is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and ARB Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARB Limited and RCI Hospitality 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 RCI Hospitality Holdings are associated (or correlated) with ARB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARB Limited has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and ARB go up and down completely randomly.
Pair Corralation between RCI Hospitality and ARB
Given the investment horizon of 90 days RCI Hospitality Holdings is expected to generate 18.0 times more return on investment than ARB. However, RCI Hospitality is 18.0 times more volatile than ARB Limited. It trades about 0.07 of its potential returns per unit of risk. ARB Limited is currently generating about -0.11 per unit of risk. If you would invest 4,356 in RCI Hospitality Holdings on September 12, 2024 and sell it today you would earn a total of 853.00 from holding RCI Hospitality Holdings or generate 19.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 60.8% |
| Values | Daily Returns |
RCI Hospitality Holdings vs. ARB Limited
Performance |
| Timeline |
| RCI Hospitality Holdings |
| ARB Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
RCI Hospitality and ARB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCI Hospitality and ARB
The main advantage of trading using opposite RCI Hospitality and ARB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality position performs unexpectedly, ARB 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 ARB will offset losses from the drop in ARB's long position.| RCI Hospitality vs. Brinker International | RCI Hospitality vs. Bloomin Brands | RCI Hospitality vs. BJs Restaurants | RCI Hospitality vs. Dennys Corp |
| ARB vs. GAMCO Global Gold | ARB vs. Advanced Micro Devices | ARB vs. STMicroelectronics NV ADR | ARB vs. Amkor Technology |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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