Correlation Between RCI Hospitality and Pool
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and Pool 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 Pool 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 Pool Corporation, you can compare the effects of market volatilities on RCI Hospitality and Pool 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 Pool. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and Pool.
Diversification Opportunities for RCI Hospitality and Pool
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RCI and Pool is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Pool Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pool 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 Pool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pool has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and Pool go up and down completely randomly.
Pair Corralation between RCI Hospitality and Pool
Given the investment horizon of 90 days RCI Hospitality Holdings is expected to generate 1.32 times more return on investment than Pool. However, RCI Hospitality is 1.32 times more volatile than Pool Corporation. It trades about 0.0 of its potential returns per unit of risk. Pool Corporation is currently generating about -0.01 per unit of risk. If you would invest 6,046 in RCI Hospitality Holdings on November 4, 2024 and sell it today you would lose (492.00) from holding RCI Hospitality Holdings or give up 8.14% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
RCI Hospitality Holdings vs. Pool Corp.
Performance |
Timeline |
RCI Hospitality Holdings |
Pool |
RCI Hospitality and Pool Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with RCI Hospitality and Pool
The main advantage of trading using opposite RCI Hospitality and Pool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality position performs unexpectedly, Pool 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 Pool will offset losses from the drop in Pool's long position.RCI Hospitality vs. Brinker International | RCI Hospitality vs. Bloomin Brands | RCI Hospitality vs. BJs Restaurants | RCI Hospitality vs. Dennys Corp |
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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