Correlation Between RCI Hospitality and Toro
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and Toro 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 Toro 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 Toro Co, you can compare the effects of market volatilities on RCI Hospitality and Toro 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 Toro. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and Toro.
Diversification Opportunities for RCI Hospitality and Toro
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RCI and Toro is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Toro Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toro 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 Toro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toro has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and Toro go up and down completely randomly.
Pair Corralation between RCI Hospitality and Toro
Given the investment horizon of 90 days RCI Hospitality Holdings is expected to under-perform the Toro. In addition to that, RCI Hospitality is 1.13 times more volatile than Toro Co. It trades about -0.03 of its total potential returns per unit of risk. Toro Co is currently generating about -0.01 per unit of volatility. If you would invest 10,085 in Toro Co on September 12, 2024 and sell it today you would lose (1,339) from holding Toro Co or give up 13.28% 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. Toro Co
Performance |
| Timeline |
| RCI Hospitality Holdings |
| Toro |
RCI Hospitality and Toro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCI Hospitality and Toro
The main advantage of trading using opposite RCI Hospitality and Toro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality position performs unexpectedly, Toro 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 Toro will offset losses from the drop in Toro'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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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