Correlation Between Paysafe and Rave Restaurant

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

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

Diversification Opportunities for Paysafe and Rave Restaurant

0.04

Correlation Coefficient

Paysafe  Rave Restaurant

Significant diversification

The 3 months correlation between Paysafe and Rave is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Paysafe 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 Paysafe 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 Paysafe 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 Paysafe i.e., Paysafe and Rave Restaurant go up and down completely randomly.

Pair Corralation between Paysafe and Rave Restaurant

Given the investment horizon of 90 days Paysafe is expected to generate 0.86 times more return on investment than Rave Restaurant. However, Paysafe is 1.16 times less risky than Rave Restaurant. It trades about -0.32 of its potential returns per unit of risk. Rave Restaurant Group is currently generating about -0.37 per unit of risk. If you would invest  1,921  in Paysafe on October 11, 2024 and sell it today you would lose (206.00) from holding Paysafe or give up 10.72% of portfolio value over 90 days.

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

Paysafe  vs.  Rave Restaurant Group

Paysafe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paysafe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Rave Restaurant Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rave Restaurant Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Rave Restaurant may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Paysafe and Rave Restaurant

The main advantage of trading using opposite Paysafe and Rave Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paysafe 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 Paysafe 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.