Correlation Between Rave Restaurant and Accretion Acquisition

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

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

Diversification Opportunities for Rave Restaurant and Accretion Acquisition

0.0

Correlation Coefficient

Rave Restaurant  Accretion Acquisition

Pay attention - limited upside

The 3 months correlation between Rave and Accretion is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Rave Restaurant Group and Accretion Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accretion Acquisition and Rave Restaurant 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 Rave Restaurant Group are associated (or correlated) with Accretion Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accretion Acquisition has no effect on the direction of Rave Restaurant i.e., Rave Restaurant and Accretion Acquisition go up and down completely randomly.

Pair Corralation between Rave Restaurant and Accretion Acquisition

Given the investment horizon of 90 days Rave Restaurant Group is expected to generate 12.15 times more return on investment than Accretion Acquisition. However, Rave Restaurant is 12.15 times more volatile than Accretion Acquisition Corp. It trades about 0.04 of its potential returns per unit of risk. Accretion Acquisition Corp is currently generating about 0.16 per unit of risk. If you would invest  175.00  in Rave Restaurant Group on October 23, 2024 and sell it today you would earn a total of  87.00  from holding Rave Restaurant Group or generate 49.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	23.68%
Values	Daily Returns

Rave Restaurant Group  vs.  Accretion Acquisition Corp

Rave Restaurant Group

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Rave Restaurant Group has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Accretion Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Accretion Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Accretion Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Rave Restaurant and Accretion Acquisition

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

The idea behind Rave Restaurant Group and Accretion Acquisition Corp 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.