Correlation Between RCI Hospitality and Cracker Barrel
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and Cracker Barrel 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 Cracker Barrel 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 Cracker Barrel Old, you can compare the effects of market volatilities on RCI Hospitality and Cracker Barrel 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 Cracker Barrel. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and Cracker Barrel.
Diversification Opportunities for RCI Hospitality and Cracker Barrel
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RCI and Cracker is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Cracker Barrel Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cracker Barrel Old 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 Cracker Barrel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cracker Barrel Old has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and Cracker Barrel go up and down completely randomly.
Pair Corralation between RCI Hospitality and Cracker Barrel
Given the investment horizon of 90 days RCI Hospitality Holdings is expected to under-perform the Cracker Barrel. But the stock apears to be less risky and, when comparing its historical volatility, RCI Hospitality Holdings is 2.17 times less risky than Cracker Barrel. The stock trades about -0.29 of its potential returns per unit of risk. The Cracker Barrel Old is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5,190 in Cracker Barrel Old on October 20, 2024 and sell it today you would earn a total of 283.00 from holding Cracker Barrel Old or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCI Hospitality Holdings vs. Cracker Barrel Old
Performance |
| Timeline |
| RCI Hospitality Holdings |
| Cracker Barrel Old |
RCI Hospitality and Cracker Barrel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCI Hospitality and Cracker Barrel
The main advantage of trading using opposite RCI Hospitality and Cracker Barrel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality position performs unexpectedly, Cracker Barrel 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 Cracker Barrel will offset losses from the drop in Cracker Barrel's long position.| RCI Hospitality vs. Brinker International | RCI Hospitality vs. Bloomin Brands | RCI Hospitality vs. BJs Restaurants | RCI Hospitality vs. Dennys Corp |
| Cracker Barrel vs. Brinker International | Cracker Barrel vs. BJs Restaurants | Cracker Barrel vs. Texas Roadhouse | Cracker Barrel vs. Papa Johns International |
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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