Correlation Between RCI Hospitality and Valneva SE
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and Valneva SE 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 Valneva SE 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 Valneva SE ADR, you can compare the effects of market volatilities on RCI Hospitality and Valneva SE 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 Valneva SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and Valneva SE.
Diversification Opportunities for RCI Hospitality and Valneva SE
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RCI and Valneva is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Valneva SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valneva SE ADR 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 Valneva SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valneva SE ADR has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and Valneva SE go up and down completely randomly.
Pair Corralation between RCI Hospitality and Valneva SE
Given the investment horizon of 90 days RCI Hospitality Holdings is expected to generate 0.73 times more return on investment than Valneva SE. However, RCI Hospitality Holdings is 1.37 times less risky than Valneva SE. It trades about -0.02 of its potential returns per unit of risk. Valneva SE ADR is currently generating about -0.08 per unit of risk. If you would invest 6,275 in RCI Hospitality Holdings on August 29, 2024 and sell it today you would lose (1,001) from holding RCI Hospitality Holdings or give up 15.95% 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. Valneva SE ADR
Performance |
| Timeline |
| RCI Hospitality Holdings |
| Valneva SE ADR |
RCI Hospitality and Valneva SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCI Hospitality and Valneva SE
The main advantage of trading using opposite RCI Hospitality and Valneva SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality position performs unexpectedly, Valneva SE 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 Valneva SE will offset losses from the drop in Valneva SE's long position.| RCI Hospitality vs. Jack In The | RCI Hospitality vs. Potbelly Co | RCI Hospitality vs. BJs Restaurants | RCI Hospitality vs. One Group Hospitality |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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