Correlation Between Mobileye Global and RCI Hospitality

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

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

Diversification Opportunities for Mobileye Global and RCI Hospitality

0.88

Correlation Coefficient

Mobileye Global  RCI Hospitality

Very poor diversification

The 3 months correlation between Mobileye and RCI is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Mobileye Global Class 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 Mobileye Global 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 Mobileye Global Class 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 Mobileye Global i.e., Mobileye Global and RCI Hospitality go up and down completely randomly.

Pair Corralation between Mobileye Global and RCI Hospitality

Given the investment horizon of 90 days Mobileye Global Class is expected to under-perform the RCI Hospitality. In addition to that, Mobileye Global is 3.28 times more volatile than RCI Hospitality Holdings. It trades about -0.13 of its total potential returns per unit of risk. RCI Hospitality Holdings is currently generating about -0.25 per unit of volatility. If you would invest  5,410  in RCI Hospitality Holdings on October 23, 2024 and sell it today you would lose (350.00) from holding RCI Hospitality Holdings or give up 6.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	88.89%
Values	Daily Returns

Mobileye Global Class  vs.  RCI Hospitality Holdings

Mobileye Global Class

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mobileye Global Class are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Mobileye Global showed solid returns over the last few months and may actually be approaching a breakup point.

RCI Hospitality Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RCI Hospitality Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, RCI Hospitality unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mobileye Global and RCI Hospitality

The main advantage of trading using opposite Mobileye Global and RCI Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mobileye Global 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 Mobileye Global Class 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.