Correlation Between RCI Hospitality and FIRSTCASH

Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and FIRSTCASH 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 FIRSTCASH 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 FIRSTCASH INC 4625, you can compare the effects of market volatilities on RCI Hospitality and FIRSTCASH 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 FIRSTCASH. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and FIRSTCASH.

Diversification Opportunities for RCI Hospitality and FIRSTCASH

-0.52

Correlation Coefficient

RCI Hospitality  FIRSTCASH

Excellent diversification

The 3 months correlation between RCI and FIRSTCASH is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and FIRSTCASH INC 4625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRSTCASH INC 4625 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 FIRSTCASH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRSTCASH INC 4625 has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and FIRSTCASH go up and down completely randomly.

Pair Corralation between RCI Hospitality and FIRSTCASH

Given the investment horizon of 90 days RCI Hospitality Holdings is expected to under-perform the FIRSTCASH. In addition to that, RCI Hospitality is 5.72 times more volatile than FIRSTCASH INC 4625. It trades about -0.2 of its total potential returns per unit of risk. FIRSTCASH INC 4625 is currently generating about 0.02 per unit of volatility. If you would invest  9,462  in FIRSTCASH INC 4625 on December 22, 2024 and sell it today you would earn a total of  38.00  from holding FIRSTCASH INC 4625 or generate 0.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.0%
Values	Daily Returns

RCI Hospitality Holdings  vs.  FIRSTCASH INC 4625

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.

FIRSTCASH INC 4625

Risk-Adjusted Performance

Weak

Over the last 90 days FIRSTCASH INC 4625 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FIRSTCASH is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with RCI Hospitality and FIRSTCASH

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

The idea behind RCI Hospitality Holdings and FIRSTCASH INC 4625 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.