Correlation Between Starbucks and RCI Hospitality
Can any of the company-specific risk be diversified away by investing in both Starbucks and RCI Hospitality 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 Starbucks and RCI Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Starbucks and RCI Hospitality Holdings, you can compare the effects of market volatilities on Starbucks and RCI Hospitality 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 Starbucks with a short position of RCI Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starbucks and RCI Hospitality.
Diversification Opportunities for Starbucks and RCI Hospitality
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Starbucks and RCI is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks and RCI Hospitality Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCI Hospitality Holdings and Starbucks 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 Starbucks are associated (or correlated) with RCI Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCI Hospitality Holdings has no effect on the direction of Starbucks i.e., Starbucks and RCI Hospitality go up and down completely randomly.
Pair Corralation between Starbucks and RCI Hospitality
Given the investment horizon of 90 days Starbucks is expected to generate 3.54 times less return on investment than RCI Hospitality. But when comparing it to its historical volatility, Starbucks is 1.96 times less risky than RCI Hospitality. It trades about 0.19 of its potential returns per unit of risk. RCI Hospitality Holdings is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 4,342 in RCI Hospitality Holdings on September 1, 2024 and sell it today you would earn a total of 904.00 from holding RCI Hospitality Holdings or generate 20.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Starbucks vs. RCI Hospitality Holdings
Performance |
| Timeline |
| Starbucks |
| RCI Hospitality Holdings |
Starbucks and RCI Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Starbucks and RCI Hospitality
The main advantage of trading using opposite Starbucks and RCI Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starbucks position performs unexpectedly, RCI Hospitality 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 RCI Hospitality will offset losses from the drop in RCI Hospitality's long position.| Starbucks vs. Chipotle Mexican Grill | Starbucks vs. Dominos Pizza | Starbucks vs. Yum Brands | Starbucks vs. The Wendys Co |
| RCI Hospitality vs. Brinker International | RCI Hospitality vs. Bloomin Brands | RCI Hospitality vs. BJs Restaurants | RCI Hospitality vs. Dennys Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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