Correlation Between Getty Images and Rave Restaurant

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

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

Diversification Opportunities for Getty Images and Rave Restaurant

-0.44

Correlation Coefficient

Getty Images  Rave Restaurant

Very good diversification

The 3 months correlation between Getty and Rave is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Getty Images Holdings 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 Getty Images 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 Getty Images Holdings 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 Getty Images i.e., Getty Images and Rave Restaurant go up and down completely randomly.

Pair Corralation between Getty Images and Rave Restaurant

Given the investment horizon of 90 days Getty Images Holdings is expected to generate 1.43 times more return on investment than Rave Restaurant. However, Getty Images is 1.43 times more volatile than Rave Restaurant Group. It trades about 0.02 of its potential returns per unit of risk. Rave Restaurant Group is currently generating about 0.02 per unit of risk. If you would invest  229.00  in Getty Images Holdings on December 19, 2024 and sell it today you would lose (3.00) from holding Getty Images Holdings or give up 1.31% of portfolio value over 90 days.

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

Getty Images Holdings  vs.  Rave Restaurant Group

Getty Images Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Getty Images Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Getty Images may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Rave Restaurant Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rave Restaurant Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Rave Restaurant is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Getty Images and Rave Restaurant

The main advantage of trading using opposite Getty Images and Rave Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Getty Images 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 Getty Images Holdings 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.