Correlation Between Dave Busters and Renault SA

Can any of the company-specific risk be diversified away by investing in both Dave Busters and Renault SA 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 Renault SA 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 Renault SA, you can compare the effects of market volatilities on Dave Busters and Renault SA 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 Renault SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dave Busters and Renault SA.

Diversification Opportunities for Dave Busters and Renault SA

-0.4

Correlation Coefficient

Dave Busters  Renault SA

Very good diversification

The 3 months correlation between Dave and Renault is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and Renault SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renault SA 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 Renault SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renault SA has no effect on the direction of Dave Busters i.e., Dave Busters and Renault SA go up and down completely randomly.

Pair Corralation between Dave Busters and Renault SA

Given the investment horizon of 90 days Dave Busters Entertainment is expected to under-perform the Renault SA. In addition to that, Dave Busters is 1.0 times more volatile than Renault SA. It trades about 0.0 of its total potential returns per unit of risk. Renault SA is currently generating about 0.06 per unit of volatility. If you would invest  3,280  in Renault SA on September 30, 2024 and sell it today you would earn a total of  1,580  from holding Renault SA or generate 48.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	63.98%
Values	Daily Returns

Dave Busters Entertainment  vs.  Renault SA

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Renault SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Renault SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Renault SA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Dave Busters and Renault SA

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

The idea behind Dave Busters Entertainment and Renault SA 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.