Correlation Between RCI Hospitality and Skechers USA
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and Skechers USA 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 Skechers USA 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 Skechers USA, you can compare the effects of market volatilities on RCI Hospitality and Skechers USA 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 Skechers USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and Skechers USA.
Diversification Opportunities for RCI Hospitality and Skechers USA
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RCI and Skechers is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA 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 Skechers USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skechers USA has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and Skechers USA go up and down completely randomly.
Pair Corralation between RCI Hospitality and Skechers USA
Given the investment horizon of 90 days RCI Hospitality Holdings is expected to under-perform the Skechers USA. In addition to that, RCI Hospitality is 1.2 times more volatile than Skechers USA. It trades about -0.02 of its total potential returns per unit of risk. Skechers USA is currently generating about 0.04 per unit of volatility. If you would invest 6,078 in Skechers USA on September 4, 2024 and sell it today you would earn a total of 839.00 from holding Skechers USA or generate 13.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCI Hospitality Holdings vs. Skechers USA
Performance |
| Timeline |
| RCI Hospitality Holdings |
| Skechers USA |
RCI Hospitality and Skechers USA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCI Hospitality and Skechers USA
The main advantage of trading using opposite RCI Hospitality and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality position performs unexpectedly, Skechers USA 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 Skechers USA will offset losses from the drop in Skechers USA's long position.| RCI Hospitality vs. Brinker International | RCI Hospitality vs. Bloomin Brands | RCI Hospitality vs. BJs Restaurants | RCI Hospitality vs. Dennys Corp |
| Skechers USA vs. On Holding | Skechers USA vs. Steven Madden | Skechers USA vs. Crocs Inc | Skechers USA vs. Designer Brands |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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