Correlation Between Bt Brands and Rave Restaurant
Can any of the company-specific risk be diversified away by investing in both Bt Brands and Rave Restaurant 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 Bt Brands and Rave Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bt Brands and Rave Restaurant Group, you can compare the effects of market volatilities on Bt Brands and Rave Restaurant 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 Bt Brands with a short position of Rave Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bt Brands and Rave Restaurant.
Diversification Opportunities for Bt Brands and Rave Restaurant
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between BTBD and Rave is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bt Brands and Rave Restaurant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rave Restaurant Group and Bt Brands 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 Bt Brands are associated (or correlated) with Rave Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rave Restaurant Group has no effect on the direction of Bt Brands i.e., Bt Brands and Rave Restaurant go up and down completely randomly.
Pair Corralation between Bt Brands and Rave Restaurant
Given the investment horizon of 90 days Bt Brands is expected to generate 1.43 times less return on investment than Rave Restaurant. In addition to that, Bt Brands is 1.87 times more volatile than Rave Restaurant Group. It trades about 0.01 of its total potential returns per unit of risk. Rave Restaurant Group is currently generating about 0.04 per unit of volatility. If you would invest 224.00 in Rave Restaurant Group on September 19, 2024 and sell it today you would earn a total of 46.00 from holding Rave Restaurant Group or generate 20.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Bt Brands vs. Rave Restaurant Group
Performance |
Timeline |
Bt Brands |
Rave Restaurant Group |
Bt Brands and Rave Restaurant Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bt Brands and Rave Restaurant
The main advantage of trading using opposite Bt Brands and Rave Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bt Brands position performs unexpectedly, Rave Restaurant 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 Rave Restaurant will offset losses from the drop in Rave Restaurant's long position.Bt Brands vs. Alsea SAB de | Bt Brands vs. Marstons PLC | Bt Brands vs. Bagger Daves Burger | Bt Brands vs. Marstons PLC |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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