Correlation Between RCI Hospitality and Portillos
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and Portillos 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 Portillos 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 Portillos, you can compare the effects of market volatilities on RCI Hospitality and Portillos 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 Portillos. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and Portillos.
Diversification Opportunities for RCI Hospitality and Portillos
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RCI and Portillos is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Portillos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portillos 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 Portillos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portillos has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and Portillos go up and down completely randomly.
Pair Corralation between RCI Hospitality and Portillos
Given the investment horizon of 90 days RCI Hospitality Holdings is expected to generate 1.05 times more return on investment than Portillos. However, RCI Hospitality is 1.05 times more volatile than Portillos. It trades about 0.31 of its potential returns per unit of risk. Portillos is currently generating about -0.28 per unit of risk. If you would invest 4,470 in RCI Hospitality Holdings on August 28, 2024 and sell it today you would earn a total of 851.00 from holding RCI Hospitality Holdings or generate 19.04% 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. Portillos
Performance |
| Timeline |
| RCI Hospitality Holdings |
| Portillos |
RCI Hospitality and Portillos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCI Hospitality and Portillos
The main advantage of trading using opposite RCI Hospitality and Portillos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality position performs unexpectedly, Portillos 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 Portillos will offset losses from the drop in Portillos' long position.| RCI Hospitality vs. Brinker International | RCI Hospitality vs. Bloomin Brands | RCI Hospitality vs. BJs Restaurants | RCI Hospitality vs. Dennys Corp |
| Portillos vs. Brinker International | Portillos vs. Bloomin Brands | Portillos vs. Wingstop | Portillos 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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