Correlation Between Rave Restaurant and Waystar Holding

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

Diversification Opportunities for Rave Restaurant and Waystar Holding

-0.56

Correlation Coefficient

Rave Restaurant  Waystar Holding

Excellent diversification

The 3 months correlation between Rave and Waystar is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Rave Restaurant Group and Waystar Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waystar Holding Corp 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 Waystar Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waystar Holding Corp has no effect on the direction of Rave Restaurant i.e., Rave Restaurant and Waystar Holding go up and down completely randomly.

Pair Corralation between Rave Restaurant and Waystar Holding

Given the investment horizon of 90 days Rave Restaurant Group is expected to under-perform the Waystar Holding. In addition to that, Rave Restaurant is 1.46 times more volatile than Waystar Holding Corp. It trades about -0.01 of its total potential returns per unit of risk. Waystar Holding Corp is currently generating about 0.3 per unit of volatility. If you would invest  2,762  in Waystar Holding Corp on October 25, 2024 and sell it today you would earn a total of  1,024  from holding Waystar Holding Corp or generate 37.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Rave Restaurant Group  vs.  Waystar Holding Corp

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.

Waystar Holding Corp

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Waystar Holding Corp are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Waystar Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rave Restaurant and Waystar Holding

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

The idea behind Rave Restaurant Group and Waystar Holding 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.