Correlation Between Rave Restaurant and NESNVX

Can any of the company-specific risk be diversified away by investing in both Rave Restaurant and NESNVX 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 NESNVX 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 NESNVX 495 14 MAR 30, you can compare the effects of market volatilities on Rave Restaurant and NESNVX 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 NESNVX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rave Restaurant and NESNVX.

Diversification Opportunities for Rave Restaurant and NESNVX

0.46

Correlation Coefficient

Rave Restaurant  NESNVX

Very weak diversification

The 3 months correlation between Rave and NESNVX is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Rave Restaurant Group and NESNVX 495 14 MAR 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESNVX 495 14 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 NESNVX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NESNVX 495 14 has no effect on the direction of Rave Restaurant i.e., Rave Restaurant and NESNVX go up and down completely randomly.

Pair Corralation between Rave Restaurant and NESNVX

Given the investment horizon of 90 days Rave Restaurant Group is expected to under-perform the NESNVX. In addition to that, Rave Restaurant is 4.71 times more volatile than NESNVX 495 14 MAR 30. It trades about -0.02 of its total potential returns per unit of risk. NESNVX 495 14 MAR 30 is currently generating about -0.04 per unit of volatility. If you would invest  10,226  in NESNVX 495 14 MAR 30 on October 25, 2024 and sell it today you would lose (63.00) from holding NESNVX 495 14 MAR 30 or give up 0.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	45.76%
Values	Daily Returns

Rave Restaurant Group  vs.  NESNVX 495 14 MAR 30

Rave Restaurant Group

Risk-Adjusted Performance

0 of 100

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.

NESNVX 495 14

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NESNVX 495 14 MAR 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NESNVX is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rave Restaurant and NESNVX

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

The idea behind Rave Restaurant Group and NESNVX 495 14 MAR 30 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.