Correlation Between RCI Hospitality and Waste Management
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and Waste Management 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 Waste Management 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 Waste Management, you can compare the effects of market volatilities on RCI Hospitality and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and Waste Management.
Diversification Opportunities for RCI Hospitality and Waste Management
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between RCI and Waste is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and Waste Management go up and down completely randomly.
Pair Corralation between RCI Hospitality and Waste Management
Given the investment horizon of 90 days RCI Hospitality Holdings is expected to under-perform the Waste Management. In addition to that, RCI Hospitality is 2.16 times more volatile than Waste Management. It trades about -0.02 of its total potential returns per unit of risk. Waste Management is currently generating about 0.11 per unit of volatility. If you would invest 17,063 in Waste Management on September 3, 2024 and sell it today you would earn a total of 5,759 from holding Waste Management or generate 33.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCI Hospitality Holdings vs. Waste Management
Performance |
| Timeline |
| RCI Hospitality Holdings |
| Waste Management |
RCI Hospitality and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCI Hospitality and Waste Management
The main advantage of trading using opposite RCI Hospitality and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| RCI Hospitality vs. Brinker International | RCI Hospitality vs. Bloomin Brands | RCI Hospitality vs. BJs Restaurants | RCI Hospitality vs. Dennys Corp |
| Waste Management vs. Waste Connections | Waste Management vs. Clean Harbors | Waste Management vs. Casella Waste Systems | Waste Management vs. Gfl Environmental Holdings |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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