Correlation Between RCI Hospitality and US Physical
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and US Physical 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 US Physical 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 US Physical Therapy, you can compare the effects of market volatilities on RCI Hospitality and US Physical 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 US Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and US Physical.
Diversification Opportunities for RCI Hospitality and US Physical
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RCI and UPH is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and US Physical Therapy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Physical Therapy 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 US Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Physical Therapy has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and US Physical go up and down completely randomly.
Pair Corralation between RCI Hospitality and US Physical
Assuming the 90 days trading horizon RCI Hospitality Holdings is expected to generate 1.14 times more return on investment than US Physical. However, RCI Hospitality is 1.14 times more volatile than US Physical Therapy. It trades about 0.1 of its potential returns per unit of risk. US Physical Therapy is currently generating about 0.03 per unit of risk. If you would invest 3,938 in RCI Hospitality Holdings on November 7, 2024 and sell it today you would earn a total of 1,312 from holding RCI Hospitality Holdings or generate 33.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCI Hospitality Holdings vs. US Physical Therapy
Performance |
| Timeline |
| RCI Hospitality Holdings |
| US Physical Therapy |
RCI Hospitality and US Physical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCI Hospitality and US Physical
The main advantage of trading using opposite RCI Hospitality and US Physical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality position performs unexpectedly, US Physical 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 US Physical will offset losses from the drop in US Physical'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 |
| US Physical vs. Take Two Interactive Software | US Physical vs. Check Point Software | US Physical vs. VITEC SOFTWARE GROUP | US Physical vs. Sekisui Chemical Co |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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