Correlation Between RCI Hospitality and COSTCO WHOLESALE
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and COSTCO WHOLESALE 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 COSTCO WHOLESALE 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 COSTCO WHOLESALE CDR, you can compare the effects of market volatilities on RCI Hospitality and COSTCO WHOLESALE 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 COSTCO WHOLESALE. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and COSTCO WHOLESALE.
Diversification Opportunities for RCI Hospitality and COSTCO WHOLESALE
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RCI and COSTCO is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and COSTCO WHOLESALE CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSTCO WHOLESALE CDR 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 COSTCO WHOLESALE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSTCO WHOLESALE CDR has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and COSTCO WHOLESALE go up and down completely randomly.
Pair Corralation between RCI Hospitality and COSTCO WHOLESALE
Assuming the 90 days trading horizon RCI Hospitality Holdings is expected to under-perform the COSTCO WHOLESALE. In addition to that, RCI Hospitality is 1.5 times more volatile than COSTCO WHOLESALE CDR. It trades about -0.02 of its total potential returns per unit of risk. COSTCO WHOLESALE CDR is currently generating about 0.09 per unit of volatility. If you would invest 1,596 in COSTCO WHOLESALE CDR on November 7, 2024 and sell it today you would earn a total of 1,404 from holding COSTCO WHOLESALE CDR or generate 87.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCI Hospitality Holdings vs. COSTCO WHOLESALE CDR
Performance |
| Timeline |
| RCI Hospitality Holdings |
| COSTCO WHOLESALE CDR |
RCI Hospitality and COSTCO WHOLESALE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCI Hospitality and COSTCO WHOLESALE
The main advantage of trading using opposite RCI Hospitality and COSTCO WHOLESALE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality position performs unexpectedly, COSTCO WHOLESALE 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 COSTCO WHOLESALE will offset losses from the drop in COSTCO WHOLESALE's long position.| RCI Hospitality vs. Cal Maine Foods | RCI Hospitality vs. US FOODS HOLDING | RCI Hospitality vs. The Japan Steel | RCI Hospitality vs. Daido Steel Co |
| COSTCO WHOLESALE vs. UMC Electronics Co | COSTCO WHOLESALE vs. Luckin Coffee | COSTCO WHOLESALE vs. BJs Restaurants | COSTCO WHOLESALE vs. Gol Intelligent Airlines |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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