Correlation Between Thor Industries and RCI Hospitality
Can any of the company-specific risk be diversified away by investing in both Thor Industries 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 Thor Industries and RCI Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thor Industries and RCI Hospitality Holdings, you can compare the effects of market volatilities on Thor Industries 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 Thor Industries with a short position of RCI Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thor Industries and RCI Hospitality.
Diversification Opportunities for Thor Industries and RCI Hospitality
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Thor and RCI is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Thor Industries 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 Thor Industries 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 Thor Industries 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 Thor Industries i.e., Thor Industries and RCI Hospitality go up and down completely randomly.
Pair Corralation between Thor Industries and RCI Hospitality
Considering the 90-day investment horizon Thor Industries is expected to generate 2.94 times less return on investment than RCI Hospitality. But when comparing it to its historical volatility, Thor Industries is 1.32 times less risky than RCI Hospitality. It trades about 0.16 of its potential returns per unit of risk. RCI Hospitality Holdings is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 4,314 in RCI Hospitality Holdings on September 2, 2024 and sell it today you would earn a total of 932.00 from holding RCI Hospitality Holdings or generate 21.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thor Industries vs. RCI Hospitality Holdings
Performance |
| Timeline |
| Thor Industries |
| RCI Hospitality Holdings |
Thor Industries and RCI Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thor Industries and RCI Hospitality
The main advantage of trading using opposite Thor Industries and RCI Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thor Industries 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.The idea behind Thor Industries and RCI Hospitality Holdings 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.| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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