Correlation Between RCI Hospitality and Everus Construction

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

Diversification Opportunities for RCI Hospitality and Everus Construction

0.85

Correlation Coefficient

RCI Hospitality  Everus Construction

Very poor diversification

The 3 months correlation between RCI and Everus is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Everus Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everus Construction 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 Everus Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everus Construction has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and Everus Construction go up and down completely randomly.

Pair Corralation between RCI Hospitality and Everus Construction

Given the investment horizon of 90 days RCI Hospitality Holdings is expected to generate 0.38 times more return on investment than Everus Construction. However, RCI Hospitality Holdings is 2.63 times less risky than Everus Construction. It trades about -0.2 of its potential returns per unit of risk. Everus Construction Group is currently generating about -0.2 per unit of risk. If you would invest  5,834  in RCI Hospitality Holdings on December 26, 2024 and sell it today you would lose (1,242) from holding RCI Hospitality Holdings or give up 21.29% of portfolio value over 90 days.

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

RCI Hospitality Holdings  vs.  Everus Construction Group

RCI Hospitality Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days RCI Hospitality Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Everus Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Everus Construction Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with RCI Hospitality and Everus Construction

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

The idea behind RCI Hospitality Holdings and Everus Construction Group 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.