Correlation Between Franklin Street and RCI Hospitality

Can any of the company-specific risk be diversified away by investing in both Franklin Street 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 Franklin Street and RCI Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Franklin Street Properties and RCI Hospitality Holdings, you can compare the effects of market volatilities on Franklin Street 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 Franklin Street with a short position of RCI Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Street and RCI Hospitality.

Diversification Opportunities for Franklin Street and RCI Hospitality

0.21

Correlation Coefficient

Franklin Street  RCI Hospitality

Modest diversification

The 3 months correlation between Franklin and RCI is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Street Properties 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 Franklin Street 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 Franklin Street Properties 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 Franklin Street i.e., Franklin Street and RCI Hospitality go up and down completely randomly.

Pair Corralation between Franklin Street and RCI Hospitality

Considering the 90-day investment horizon Franklin Street Properties is expected to generate 1.13 times more return on investment than RCI Hospitality. However, Franklin Street is 1.13 times more volatile than RCI Hospitality Holdings. It trades about 0.0 of its potential returns per unit of risk. RCI Hospitality Holdings is currently generating about -0.19 per unit of risk. If you would invest  188.00  in Franklin Street Properties on December 25, 2024 and sell it today you would lose (2.00) from holding Franklin Street Properties or give up 1.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Franklin Street Properties  vs.  RCI Hospitality Holdings

Franklin Street Prop

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin Street Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Franklin Street is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

RCI Hospitality Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days RCI Hospitality Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Franklin Street and RCI Hospitality

The main advantage of trading using opposite Franklin Street and RCI Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Street 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 Franklin Street Properties 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.