Correlation Between RCI Hospitality and Goldman Sachs

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Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and Goldman Sachs 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 Goldman Sachs 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 The Goldman Sachs, you can compare the effects of market volatilities on RCI Hospitality and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and Goldman Sachs.

Diversification Opportunities for RCI Hospitality and Goldman Sachs

RCIGoldmanDiversified AwayRCIGoldmanDiversified Away100%
-0.16
  Correlation Coefficient

Good diversification

The 3 months correlation between RCI and Goldman is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and The Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and Goldman Sachs go up and down completely randomly.

Pair Corralation between RCI Hospitality and Goldman Sachs

Assuming the 90 days trading horizon RCI Hospitality Holdings is expected to under-perform the Goldman Sachs. In addition to that, RCI Hospitality is 1.22 times more volatile than The Goldman Sachs. It trades about -0.06 of its total potential returns per unit of risk. The Goldman Sachs is currently generating about 0.25 per unit of volatility. If you would invest  54,630  in The Goldman Sachs on November 20, 2024 and sell it today you would earn a total of  8,860  from holding The Goldman Sachs or generate 16.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

RCI Hospitality Holdings  vs.  The Goldman Sachs

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-50510
JavaScript chart by amCharts 3.21.15RIK GOS
       Timeline  
RCI Hospitality Holdings 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in RCI Hospitality Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, RCI Hospitality unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb464850525456
Goldman Sachs 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in The Goldman Sachs are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Goldman Sachs unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb540560580600620640

RCI Hospitality and Goldman Sachs Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.94-5.2-3.46-1.710.01.773.615.447.289.11 0.050.100.150.20
JavaScript chart by amCharts 3.21.15RIK GOS
       Returns  

Pair Trading with RCI Hospitality and Goldman Sachs

The main advantage of trading using opposite RCI Hospitality and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.
The idea behind RCI Hospitality Holdings and The Goldman Sachs pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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