Correlation Between RCI Hospitality and Bayer AG
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and Bayer AG 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 Bayer AG 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 Bayer AG, you can compare the effects of market volatilities on RCI Hospitality and Bayer AG 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 Bayer AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and Bayer AG.
Diversification Opportunities for RCI Hospitality and Bayer AG
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RCI and Bayer is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Bayer AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer AG 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 Bayer AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer AG has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and Bayer AG go up and down completely randomly.
Pair Corralation between RCI Hospitality and Bayer AG
Given the investment horizon of 90 days RCI Hospitality Holdings is expected to under-perform the Bayer AG. In addition to that, RCI Hospitality is 1.24 times more volatile than Bayer AG. It trades about -0.23 of its total potential returns per unit of risk. Bayer AG is currently generating about 0.13 per unit of volatility. If you would invest 2,203 in Bayer AG on November 25, 2024 and sell it today you would earn a total of 88.00 from holding Bayer AG or generate 3.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
RCI Hospitality Holdings vs. Bayer AG
Performance |
Timeline |
RCI Hospitality Holdings |
Bayer AG |
RCI Hospitality and Bayer AG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with RCI Hospitality and Bayer AG
The main advantage of trading using opposite RCI Hospitality and Bayer AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality position performs unexpectedly, Bayer AG 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 Bayer AG will offset losses from the drop in Bayer AG's long position.RCI Hospitality vs. Brinker International | ||
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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