Correlation Between RCI Hospitality and SPROUTS FARMERS
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and SPROUTS FARMERS 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 SPROUTS FARMERS 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 SPROUTS FARMERS MKT, you can compare the effects of market volatilities on RCI Hospitality and SPROUTS FARMERS 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 SPROUTS FARMERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and SPROUTS FARMERS.
Diversification Opportunities for RCI Hospitality and SPROUTS FARMERS
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RCI and SPROUTS is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and SPROUTS FARMERS MKT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPROUTS FARMERS MKT 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 SPROUTS FARMERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPROUTS FARMERS MKT has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and SPROUTS FARMERS go up and down completely randomly.
Pair Corralation between RCI Hospitality and SPROUTS FARMERS
Assuming the 90 days trading horizon RCI Hospitality Holdings is expected to under-perform the SPROUTS FARMERS. But the stock apears to be less risky and, when comparing its historical volatility, RCI Hospitality Holdings is 1.15 times less risky than SPROUTS FARMERS. The stock trades about -0.07 of its potential returns per unit of risk. The SPROUTS FARMERS MKT is currently generating about 0.52 of returns per unit of risk over similar time horizon. If you would invest 13,020 in SPROUTS FARMERS MKT on November 7, 2024 and sell it today you would earn a total of 3,050 from holding SPROUTS FARMERS MKT or generate 23.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
RCI Hospitality Holdings vs. SPROUTS FARMERS MKT
Performance |
| Timeline |
| RCI Hospitality Holdings |
| SPROUTS FARMERS MKT |
RCI Hospitality and SPROUTS FARMERS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCI Hospitality and SPROUTS FARMERS
The main advantage of trading using opposite RCI Hospitality and SPROUTS FARMERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality position performs unexpectedly, SPROUTS FARMERS 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 SPROUTS FARMERS will offset losses from the drop in SPROUTS FARMERS's long position.| RCI Hospitality vs. Air Transport Services | RCI Hospitality vs. Direct Line Insurance | RCI Hospitality vs. BANK OF CHINA | RCI Hospitality vs. UNIQA INSURANCE GR |
| SPROUTS FARMERS vs. Apple Inc | SPROUTS FARMERS vs. Apple Inc | SPROUTS FARMERS vs. Apple Inc | SPROUTS FARMERS vs. Apple Inc |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |