Correlation Between RCI Hospitality and Restaurant Brands
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and Restaurant Brands 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 Restaurant Brands 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 Restaurant Brands International, you can compare the effects of market volatilities on RCI Hospitality and Restaurant Brands 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 Restaurant Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and Restaurant Brands.
Diversification Opportunities for RCI Hospitality and Restaurant Brands
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between RCI and Restaurant is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Restaurant Brands Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Restaurant Brands 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 Restaurant Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Restaurant Brands has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and Restaurant Brands go up and down completely randomly.
Pair Corralation between RCI Hospitality and Restaurant Brands
Assuming the 90 days trading horizon RCI Hospitality Holdings is expected to generate 2.77 times more return on investment than Restaurant Brands. However, RCI Hospitality is 2.77 times more volatile than Restaurant Brands International. It trades about 0.14 of its potential returns per unit of risk. Restaurant Brands International is currently generating about -0.15 per unit of risk. If you would invest 4,089 in RCI Hospitality Holdings on October 26, 2024 and sell it today you would earn a total of 1,041 from holding RCI Hospitality Holdings or generate 25.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCI Hospitality Holdings vs. Restaurant Brands Internationa
Performance |
| Timeline |
| RCI Hospitality Holdings |
| Restaurant Brands |
RCI Hospitality and Restaurant Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCI Hospitality and Restaurant Brands
The main advantage of trading using opposite RCI Hospitality and Restaurant Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality position performs unexpectedly, Restaurant Brands 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 Restaurant Brands will offset losses from the drop in Restaurant Brands' long position.| RCI Hospitality vs. URBAN OUTFITTERS | RCI Hospitality vs. Agilent Technologies | RCI Hospitality vs. Chiba Bank | RCI Hospitality vs. Erste Group Bank |
| Restaurant Brands vs. Regal Hotels International | Restaurant Brands vs. Wyndham Hotels Resorts | Restaurant Brands vs. RCI Hospitality Holdings | Restaurant Brands vs. Choice Hotels 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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