Correlation Between US Physical and RCI Hospitality
Can any of the company-specific risk be diversified away by investing in both US Physical 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 US Physical and RCI Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Physical Therapy and RCI Hospitality Holdings, you can compare the effects of market volatilities on US Physical 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 US Physical with a short position of RCI Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Physical and RCI Hospitality.
Diversification Opportunities for US Physical and RCI Hospitality
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UPH and RCI is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding US Physical Therapy 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 US Physical 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 US Physical Therapy 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 US Physical i.e., US Physical and RCI Hospitality go up and down completely randomly.
Pair Corralation between US Physical and RCI Hospitality
Assuming the 90 days horizon US Physical Therapy is expected to generate 1.25 times more return on investment than RCI Hospitality. However, US Physical is 1.25 times more volatile than RCI Hospitality Holdings. It trades about 0.02 of its potential returns per unit of risk. RCI Hospitality Holdings is currently generating about -0.1 per unit of risk. If you would invest 8,550 in US Physical Therapy on November 7, 2024 and sell it today you would earn a total of 50.00 from holding US Physical Therapy or generate 0.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Physical Therapy vs. RCI Hospitality Holdings
Performance |
| Timeline |
| US Physical Therapy |
| RCI Hospitality Holdings |
US Physical and RCI Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Physical and RCI Hospitality
The main advantage of trading using opposite US Physical and RCI Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Physical 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.| 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 |
| RCI Hospitality vs. Cal Maine Foods | RCI Hospitality vs. US FOODS HOLDING | RCI Hospitality vs. The Japan Steel | RCI Hospitality vs. Daido Steel 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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