Correlation Between RCI Hospitality and FREEPORT

Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and FREEPORT 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 FREEPORT 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 FREEPORT MCMORAN INC 525, you can compare the effects of market volatilities on RCI Hospitality and FREEPORT 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 FREEPORT. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and FREEPORT.

Diversification Opportunities for RCI Hospitality and FREEPORT

-0.17

Correlation Coefficient

RCI Hospitality  FREEPORT

Good diversification

The 3 months correlation between RCI and FREEPORT is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and FREEPORT MCMORAN INC 525 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FREEPORT MCMORAN INC 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 FREEPORT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FREEPORT MCMORAN INC has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and FREEPORT go up and down completely randomly.

Pair Corralation between RCI Hospitality and FREEPORT

Given the investment horizon of 90 days RCI Hospitality Holdings is expected to generate 7.11 times more return on investment than FREEPORT. However, RCI Hospitality is 7.11 times more volatile than FREEPORT MCMORAN INC 525. It trades about 0.16 of its potential returns per unit of risk. FREEPORT MCMORAN INC 525 is currently generating about 0.02 per unit of risk. If you would invest  4,319  in RCI Hospitality Holdings on October 24, 2024 and sell it today you would earn a total of  1,060  from holding RCI Hospitality Holdings or generate 24.53% return on investment over 90 days.

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

RCI Hospitality Holdings  vs.  FREEPORT MCMORAN INC 525

RCI Hospitality Holdings

Risk-Adjusted Performance

12 of 100

OK

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 fragile fundamental indicators, RCI Hospitality disclosed solid returns over the last few months and may actually be approaching a breakup point.

FREEPORT MCMORAN INC

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FREEPORT MCMORAN INC 525 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, FREEPORT 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 FREEPORT

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

The idea behind RCI Hospitality Holdings and FREEPORT MCMORAN INC 525 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.