Correlation Between RCI Hospitality and Mamas Creations
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and Mamas Creations 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 Mamas Creations 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 Mamas Creations, you can compare the effects of market volatilities on RCI Hospitality and Mamas Creations 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 Mamas Creations. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and Mamas Creations.
Diversification Opportunities for RCI Hospitality and Mamas Creations
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between RCI and Mamas is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Mamas Creations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mamas Creations 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 Mamas Creations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mamas Creations has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and Mamas Creations go up and down completely randomly.
Pair Corralation between RCI Hospitality and Mamas Creations
Given the investment horizon of 90 days RCI Hospitality Holdings is expected to under-perform the Mamas Creations. But the stock apears to be less risky and, when comparing its historical volatility, RCI Hospitality Holdings is 2.34 times less risky than Mamas Creations. The stock trades about -0.19 of its potential returns per unit of risk. The Mamas Creations is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 756.00 in Mamas Creations on October 25, 2024 and sell it today you would earn a total of 23.00 from holding Mamas Creations or generate 3.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCI Hospitality Holdings vs. Mamas Creations
Performance |
| Timeline |
| RCI Hospitality Holdings |
| Mamas Creations |
RCI Hospitality and Mamas Creations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCI Hospitality and Mamas Creations
The main advantage of trading using opposite RCI Hospitality and Mamas Creations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality position performs unexpectedly, Mamas Creations 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 Mamas Creations will offset losses from the drop in Mamas Creations' long position.| RCI Hospitality vs. Brinker International | RCI Hospitality vs. Bloomin Brands | RCI Hospitality vs. BJs Restaurants | RCI Hospitality vs. Dennys Corp |
| Mamas Creations vs. Ingredion Incorporated | Mamas Creations vs. Hanover Foods | Mamas Creations vs. BBB Foods | Mamas Creations vs. Harmony Gold Mining |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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