Correlation Between RCI Hospitality and Dave Busters
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and Dave Busters 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 Dave Busters 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 Dave Busters Entertainment, you can compare the effects of market volatilities on RCI Hospitality and Dave Busters 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 Dave Busters. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and Dave Busters.
Diversification Opportunities for RCI Hospitality and Dave Busters
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RCI and Dave is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Dave Busters Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dave Busters Enterta 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 Dave Busters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dave Busters Enterta has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and Dave Busters go up and down completely randomly.
Pair Corralation between RCI Hospitality and Dave Busters
Given the investment horizon of 90 days RCI Hospitality Holdings is expected to under-perform the Dave Busters. But the stock apears to be less risky and, when comparing its historical volatility, RCI Hospitality Holdings is 1.33 times less risky than Dave Busters. The stock trades about -0.04 of its potential returns per unit of risk. The Dave Busters Entertainment is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 4,016 in Dave Busters Entertainment on August 31, 2024 and sell it today you would lose (84.00) from holding Dave Busters Entertainment or give up 2.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCI Hospitality Holdings vs. Dave Busters Entertainment
Performance |
| Timeline |
| RCI Hospitality Holdings |
| Dave Busters Enterta |
RCI Hospitality and Dave Busters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCI Hospitality and Dave Busters
The main advantage of trading using opposite RCI Hospitality and Dave Busters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality position performs unexpectedly, Dave Busters 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 Dave Busters will offset losses from the drop in Dave Busters' long position.| RCI Hospitality vs. Brinker International | RCI Hospitality vs. Bloomin Brands | RCI Hospitality vs. BJs Restaurants | RCI Hospitality vs. Dennys Corp |
| Dave Busters vs. Imax Corp | Dave Busters vs. Marcus | Dave Busters vs. AMC Networks | Dave Busters vs. Cinemark Holdings |
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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