Correlation Between HF Sinclair and Rave Restaurant

Can any of the company-specific risk be diversified away by investing in both HF Sinclair 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 HF Sinclair and Rave Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HF Sinclair Corp and Rave Restaurant Group, you can compare the effects of market volatilities on HF Sinclair 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 HF Sinclair with a short position of Rave Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of HF Sinclair and Rave Restaurant.

Diversification Opportunities for HF Sinclair and Rave Restaurant

-0.33

Correlation Coefficient

HF Sinclair  Rave Restaurant

Very good diversification

The 3 months correlation between DINO and Rave is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding HF Sinclair Corp 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 HF Sinclair 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 HF Sinclair Corp 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 HF Sinclair i.e., HF Sinclair and Rave Restaurant go up and down completely randomly.

Pair Corralation between HF Sinclair and Rave Restaurant

Given the investment horizon of 90 days HF Sinclair Corp is expected to generate 0.68 times more return on investment than Rave Restaurant. However, HF Sinclair Corp is 1.47 times less risky than Rave Restaurant. It trades about -0.39 of its potential returns per unit of risk. Rave Restaurant Group is currently generating about -0.28 per unit of risk. If you would invest  4,048  in HF Sinclair Corp on October 4, 2024 and sell it today you would lose (543.00) from holding HF Sinclair Corp or give up 13.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

HF Sinclair Corp  vs.  Rave Restaurant Group

HF Sinclair Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HF Sinclair Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Rave Restaurant Group

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rave Restaurant Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Rave Restaurant may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with HF Sinclair and Rave Restaurant

The main advantage of trading using opposite HF Sinclair and Rave Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HF Sinclair 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.

The idea behind HF Sinclair Corp and Rave Restaurant Group 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.

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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.