Correlation Between Red Robin and AW Revenue

Can any of the company-specific risk be diversified away by investing in both Red Robin and AW Revenue 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 Red Robin and AW Revenue into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Red Robin Gourmet and AW Revenue Royalties, you can compare the effects of market volatilities on Red Robin and AW Revenue 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 Red Robin with a short position of AW Revenue. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Robin and AW Revenue.

Diversification Opportunities for Red Robin and AW Revenue

0.32

Correlation Coefficient

Red Robin  AW Revenue

Weak diversification

The 3 months correlation between Red and AWRRF is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Red Robin Gourmet and AW Revenue Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AW Revenue Royalties and Red Robin 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 Red Robin Gourmet are associated (or correlated) with AW Revenue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AW Revenue Royalties has no effect on the direction of Red Robin i.e., Red Robin and AW Revenue go up and down completely randomly.

Pair Corralation between Red Robin and AW Revenue

If you would invest  559.00  in Red Robin Gourmet on October 8, 2024 and sell it today you would earn a total of  32.00  from holding Red Robin Gourmet or generate 5.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	5.26%
Values	Daily Returns

Red Robin Gourmet  vs.  AW Revenue Royalties

Red Robin Gourmet

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Red Robin Gourmet are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Red Robin sustained solid returns over the last few months and may actually be approaching a breakup point.

AW Revenue Royalties

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days AW Revenue Royalties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly inconsistent basic indicators, AW Revenue reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Red Robin and AW Revenue

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

The idea behind Red Robin Gourmet and AW Revenue Royalties 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.