Correlation Between Rave Restaurant and KEYCORP

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

Diversification Opportunities for Rave Restaurant and KEYCORP

-0.38

Correlation Coefficient

Rave Restaurant  KEYCORP

Very good diversification

The 3 months correlation between Rave and KEYCORP is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Rave Restaurant Group and KEYCORP MTN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEYCORP MTN 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 KEYCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEYCORP MTN has no effect on the direction of Rave Restaurant i.e., Rave Restaurant and KEYCORP go up and down completely randomly.

Pair Corralation between Rave Restaurant and KEYCORP

Given the investment horizon of 90 days Rave Restaurant Group is expected to generate 0.81 times more return on investment than KEYCORP. However, Rave Restaurant Group is 1.24 times less risky than KEYCORP. It trades about 0.0 of its potential returns per unit of risk. KEYCORP MTN is currently generating about -0.19 per unit of risk. If you would invest  272.00  in Rave Restaurant Group on September 19, 2024 and sell it today you would lose (2.00) from holding Rave Restaurant Group or give up 0.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Rave Restaurant Group  vs.  KEYCORP MTN

Rave Restaurant Group

Risk-Adjusted Performance

13 of 100

Solid

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.

KEYCORP MTN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEYCORP MTN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for KEYCORP MTN investors.

Pair Trading with Rave Restaurant and KEYCORP

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

The idea behind Rave Restaurant Group and KEYCORP MTN 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.