Correlation Between Rave Restaurant and 020002AJ0

Can any of the company-specific risk be diversified away by investing in both Rave Restaurant and 020002AJ0 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 020002AJ0 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 ALL 69 15 MAY 38, you can compare the effects of market volatilities on Rave Restaurant and 020002AJ0 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 020002AJ0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rave Restaurant and 020002AJ0.

Diversification Opportunities for Rave Restaurant and 020002AJ0

-0.12

Correlation Coefficient

Rave Restaurant  020002AJ0

Good diversification

The 3 months correlation between Rave and 020002AJ0 is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Rave Restaurant Group and ALL 69 15 MAY 38 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALL 69 15 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 020002AJ0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALL 69 15 has no effect on the direction of Rave Restaurant i.e., Rave Restaurant and 020002AJ0 go up and down completely randomly.

Pair Corralation between Rave Restaurant and 020002AJ0

Given the investment horizon of 90 days Rave Restaurant Group is expected to generate 1.13 times more return on investment than 020002AJ0. However, Rave Restaurant is 1.13 times more volatile than ALL 69 15 MAY 38. It trades about 0.05 of its potential returns per unit of risk. ALL 69 15 MAY 38 is currently generating about 0.02 per unit of risk. If you would invest  154.00  in Rave Restaurant Group on September 23, 2024 and sell it today you would earn a total of  113.00  from holding Rave Restaurant Group or generate 73.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	28.57%
Values	Daily Returns

Rave Restaurant Group  vs.  ALL 69 15 MAY 38

Rave Restaurant Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rave Restaurant Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Rave Restaurant exhibited solid returns over the last few months and may actually be approaching a breakup point.

ALL 69 15

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ALL 69 15 MAY 38 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 020002AJ0 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rave Restaurant and 020002AJ0

The main advantage of trading using opposite Rave Restaurant and 020002AJ0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rave Restaurant position performs unexpectedly, 020002AJ0 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 020002AJ0 will offset losses from the drop in 020002AJ0's long position.

The idea behind Rave Restaurant Group and ALL 69 15 MAY 38 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.