Correlation Between RCI Hospitality and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and Universal Insurance 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 Universal Insurance 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 Universal Insurance Holdings, you can compare the effects of market volatilities on RCI Hospitality and Universal Insurance 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 Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and Universal Insurance.
Diversification Opportunities for RCI Hospitality and Universal Insurance
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between RCI and Universal is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance 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 Universal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Insurance has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and Universal Insurance go up and down completely randomly.
Pair Corralation between RCI Hospitality and Universal Insurance
Assuming the 90 days trading horizon RCI Hospitality Holdings is expected to generate 1.04 times more return on investment than Universal Insurance. However, RCI Hospitality is 1.04 times more volatile than Universal Insurance Holdings. It trades about -0.07 of its potential returns per unit of risk. Universal Insurance Holdings is currently generating about -0.09 per unit of risk. If you would invest 5,450 in RCI Hospitality Holdings on November 5, 2024 and sell it today you would lose (130.00) from holding RCI Hospitality Holdings or give up 2.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCI Hospitality Holdings vs. Universal Insurance Holdings
Performance |
| Timeline |
| RCI Hospitality Holdings |
| Universal Insurance |
RCI Hospitality and Universal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCI Hospitality and Universal Insurance
The main advantage of trading using opposite RCI Hospitality and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality position performs unexpectedly, Universal Insurance 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 Universal Insurance will offset losses from the drop in Universal Insurance's long position.| RCI Hospitality vs. SIVERS SEMICONDUCTORS AB | RCI Hospitality vs. NorAm Drilling AS | RCI Hospitality vs. Volkswagen AG | RCI Hospitality vs. Darden Restaurants |
| Universal Insurance vs. WIMFARM SA EO | Universal Insurance vs. North American Construction | Universal Insurance vs. Australian Agricultural | Universal Insurance vs. BII Railway Transportation |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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