Correlation Between RCI Hospitality and Stifel Financial

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

Diversification Opportunities for RCI Hospitality and Stifel Financial

0.07

Correlation Coefficient

RCI Hospitality  Stifel Financial

Significant diversification

The 3 months correlation between RCI and Stifel is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Stifel Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stifel Financial Corp 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 Stifel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stifel Financial Corp has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and Stifel Financial go up and down completely randomly.

Pair Corralation between RCI Hospitality and Stifel Financial

Given the investment horizon of 90 days RCI Hospitality Holdings is expected to under-perform the Stifel Financial. In addition to that, RCI Hospitality is 2.46 times more volatile than Stifel Financial Corp. It trades about -0.18 of its total potential returns per unit of risk. Stifel Financial Corp is currently generating about 0.02 per unit of volatility. If you would invest  2,422  in Stifel Financial Corp on December 20, 2024 and sell it today you would earn a total of  15.00  from holding Stifel Financial Corp or generate 0.62% return on investment over 90 days.

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

RCI Hospitality Holdings  vs.  Stifel Financial Corp

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.

Stifel Financial Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stifel Financial Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Stifel Financial is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with RCI Hospitality and Stifel Financial

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

The idea behind RCI Hospitality Holdings and Stifel Financial 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.