Correlation Between 26884ABB8 and Rave Restaurant

Can any of the company-specific risk be diversified away by investing in both 26884ABB8 and Rave Restaurant 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 26884ABB8 and Rave Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ERP OPER LTD and Rave Restaurant Group, you can compare the effects of market volatilities on 26884ABB8 and Rave Restaurant 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 26884ABB8 with a short position of Rave Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of 26884ABB8 and Rave Restaurant.

Diversification Opportunities for 26884ABB8 and Rave Restaurant

0.34

Correlation Coefficient

26884ABB8  Rave Restaurant

Weak diversification

The 3 months correlation between 26884ABB8 and Rave is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding ERP OPER LTD and Rave Restaurant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rave Restaurant Group and 26884ABB8 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 ERP OPER LTD are associated (or correlated) with Rave Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rave Restaurant Group has no effect on the direction of 26884ABB8 i.e., 26884ABB8 and Rave Restaurant go up and down completely randomly.

Pair Corralation between 26884ABB8 and Rave Restaurant

Assuming the 90 days trading horizon ERP OPER LTD is expected to under-perform the Rave Restaurant. But the bond apears to be less risky and, when comparing its historical volatility, ERP OPER LTD is 4.15 times less risky than Rave Restaurant. The bond trades about -0.11 of its potential returns per unit of risk. The Rave Restaurant Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  301.00  in Rave Restaurant Group on December 2, 2024 and sell it today you would earn a total of  20.00  from holding Rave Restaurant Group or generate 6.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	62.3%
Values	Daily Returns

ERP OPER LTD  vs.  Rave Restaurant Group

ERP OPER LTD

Risk-Adjusted Performance

Very Weak

Over the last 90 days ERP OPER LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 26884ABB8 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Rave Restaurant Group

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rave Restaurant Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Rave Restaurant may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with 26884ABB8 and Rave Restaurant

The main advantage of trading using opposite 26884ABB8 and Rave Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 26884ABB8 position performs unexpectedly, Rave Restaurant 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 Rave Restaurant will offset losses from the drop in Rave Restaurant's long position.

The idea behind ERP OPER LTD and Rave Restaurant 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.