Correlation Between Dave Busters and La Rosa

Can any of the company-specific risk be diversified away by investing in both Dave Busters and La Rosa 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 Dave Busters and La Rosa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dave Busters Entertainment and La Rosa Holdings, you can compare the effects of market volatilities on Dave Busters and La Rosa 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 Dave Busters with a short position of La Rosa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dave Busters and La Rosa.

Diversification Opportunities for Dave Busters and La Rosa

0.06

Correlation Coefficient

Dave Busters  La Rosa

Significant diversification

The 3 months correlation between Dave and LRHC is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and La Rosa Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La Rosa Holdings and Dave Busters 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 Dave Busters Entertainment are associated (or correlated) with La Rosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La Rosa Holdings has no effect on the direction of Dave Busters i.e., Dave Busters and La Rosa go up and down completely randomly.

Pair Corralation between Dave Busters and La Rosa

Given the investment horizon of 90 days Dave Busters Entertainment is expected to under-perform the La Rosa. But the stock apears to be less risky and, when comparing its historical volatility, Dave Busters Entertainment is 4.54 times less risky than La Rosa. The stock trades about -0.01 of its potential returns per unit of risk. The La Rosa Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  500.00  in La Rosa Holdings on October 11, 2024 and sell it today you would lose (447.00) from holding La Rosa Holdings or give up 89.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	63.64%
Values	Daily Returns

Dave Busters Entertainment  vs.  La Rosa Holdings

Dave Busters Enterta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dave Busters Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Dave Busters is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

La Rosa Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in La Rosa Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical indicators, La Rosa exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dave Busters and La Rosa

The main advantage of trading using opposite Dave Busters and La Rosa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dave Busters position performs unexpectedly, La Rosa 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 La Rosa will offset losses from the drop in La Rosa's long position.

The idea behind Dave Busters Entertainment and La Rosa 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.