Correlation Between Ruths Hospitality and Compass Group
Can any of the company-specific risk be diversified away by investing in both Ruths Hospitality and Compass Group 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 Ruths Hospitality and Compass Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ruths Hospitality Group and Compass Group PLC, you can compare the effects of market volatilities on Ruths Hospitality and Compass Group 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 Ruths Hospitality with a short position of Compass Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruths Hospitality and Compass Group.
Diversification Opportunities for Ruths Hospitality and Compass Group
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ruths and Compass is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Ruths Hospitality Group and Compass Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Group PLC and Ruths 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 Ruths Hospitality Group are associated (or correlated) with Compass Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Group PLC has no effect on the direction of Ruths Hospitality i.e., Ruths Hospitality and Compass Group go up and down completely randomly.
Pair Corralation between Ruths Hospitality and Compass Group
Given the investment horizon of 90 days Ruths Hospitality Group is expected to generate 3.41 times more return on investment than Compass Group. However, Ruths Hospitality is 3.41 times more volatile than Compass Group PLC. It trades about 0.1 of its potential returns per unit of risk. Compass Group PLC is currently generating about 0.09 per unit of risk. If you would invest 1,501 in Ruths Hospitality Group on September 14, 2024 and sell it today you would earn a total of 648.00 from holding Ruths Hospitality Group or generate 43.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 24.09% |
| Values | Daily Returns |
Ruths Hospitality Group vs. Compass Group PLC
Performance |
| Timeline |
| Ruths Hospitality |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Compass Group PLC |
Ruths Hospitality and Compass Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruths Hospitality and Compass Group
The main advantage of trading using opposite Ruths Hospitality and Compass Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruths Hospitality position performs unexpectedly, Compass Group 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 Compass Group will offset losses from the drop in Compass Group's long position.| Ruths Hospitality vs. Dine Brands Global | Ruths Hospitality vs. Bloomin Brands | Ruths Hospitality vs. BJs Restaurants | Ruths Hospitality vs. The Cheesecake Factory |
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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 Stocks Directory module to find actively traded stocks across global markets.
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