Correlation Between RCI Hospitality and Ardent Health

Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and Ardent Health 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 RCI Hospitality and Ardent Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RCI Hospitality Holdings and Ardent Health Partners,, you can compare the effects of market volatilities on RCI Hospitality and Ardent Health 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 RCI Hospitality with a short position of Ardent Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and Ardent Health.

Diversification Opportunities for RCI Hospitality and Ardent Health

-0.64

Correlation Coefficient

RCI Hospitality  Ardent Health

Excellent diversification

The 3 months correlation between RCI and Ardent is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Ardent Health Partners, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardent Health Partners, and RCI Hospitality 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 RCI Hospitality Holdings are associated (or correlated) with Ardent Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardent Health Partners, has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and Ardent Health go up and down completely randomly.

Pair Corralation between RCI Hospitality and Ardent Health

Given the investment horizon of 90 days RCI Hospitality Holdings is expected to generate 0.45 times more return on investment than Ardent Health. However, RCI Hospitality Holdings is 2.23 times less risky than Ardent Health. It trades about -0.19 of its potential returns per unit of risk. Ardent Health Partners, is currently generating about -0.13 per unit of risk. If you would invest  5,741  in RCI Hospitality Holdings on October 25, 2024 and sell it today you would lose (330.00) from holding RCI Hospitality Holdings or give up 5.75% of portfolio value over 90 days.

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

RCI Hospitality Holdings  vs.  Ardent Health Partners,

RCI Hospitality Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RCI Hospitality Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental indicators, RCI Hospitality disclosed solid returns over the last few months and may actually be approaching a breakup point.

Ardent Health Partners,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ardent Health Partners, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with RCI Hospitality and Ardent Health

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

The idea behind RCI Hospitality Holdings and Ardent Health Partners, 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.