Correlation Between RCI Hospitality and Unum

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

Diversification Opportunities for RCI Hospitality and Unum

-0.31

Correlation Coefficient

RCI Hospitality  Unum

Very good diversification

The 3 months correlation between RCI and Unum is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Unum Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unum Group 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 Unum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unum Group has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and Unum go up and down completely randomly.

Pair Corralation between RCI Hospitality and Unum

Given the investment horizon of 90 days RCI Hospitality Holdings is expected to under-perform the Unum. In addition to that, RCI Hospitality is 1.29 times more volatile than Unum Group. It trades about -0.31 of its total potential returns per unit of risk. Unum Group is currently generating about -0.13 per unit of volatility. If you would invest  2,468  in Unum Group on October 22, 2024 and sell it today you would lose (68.00) from holding Unum Group or give up 2.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

RCI Hospitality Holdings  vs.  Unum Group

RCI Hospitality Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RCI Hospitality Holdings are ranked lower than 10 (%) 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.

Unum Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unum Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Unum is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with RCI Hospitality and Unum

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

The idea behind RCI Hospitality Holdings and Unum 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.