Correlation Between RCI Hospitality and BROADWIND ENRGY
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and BROADWIND ENRGY 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 BROADWIND ENRGY 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 BROADWIND ENRGY, you can compare the effects of market volatilities on RCI Hospitality and BROADWIND ENRGY 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 BROADWIND ENRGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and BROADWIND ENRGY.
Diversification Opportunities for RCI Hospitality and BROADWIND ENRGY
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between RCI and BROADWIND is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and BROADWIND ENRGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROADWIND ENRGY 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 BROADWIND ENRGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROADWIND ENRGY has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and BROADWIND ENRGY go up and down completely randomly.
Pair Corralation between RCI Hospitality and BROADWIND ENRGY
Assuming the 90 days trading horizon RCI Hospitality Holdings is expected to generate 0.34 times more return on investment than BROADWIND ENRGY. However, RCI Hospitality Holdings is 2.96 times less risky than BROADWIND ENRGY. It trades about -0.11 of its potential returns per unit of risk. BROADWIND ENRGY is currently generating about -0.17 per unit of risk. If you would invest 5,550 in RCI Hospitality Holdings on November 3, 2024 and sell it today you would lose (230.00) from holding RCI Hospitality Holdings or give up 4.14% 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. BROADWIND ENRGY
Performance |
| Timeline |
| RCI Hospitality Holdings |
| BROADWIND ENRGY |
RCI Hospitality and BROADWIND ENRGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCI Hospitality and BROADWIND ENRGY
The main advantage of trading using opposite RCI Hospitality and BROADWIND ENRGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality position performs unexpectedly, BROADWIND ENRGY 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 BROADWIND ENRGY will offset losses from the drop in BROADWIND ENRGY's long position.| RCI Hospitality vs. Inspire Medical Systems | RCI Hospitality vs. Ares Management Corp | RCI Hospitality vs. Acadia Healthcare | RCI Hospitality vs. Siemens Healthineers AG |
| BROADWIND ENRGY vs. ecotel communication ag | BROADWIND ENRGY vs. Comba Telecom Systems | BROADWIND ENRGY vs. ZURICH INSURANCE GROUP | BROADWIND ENRGY vs. Spirent Communications plc |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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