Correlation Between RCI Hospitality and CAVA Group,

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

Diversification Opportunities for RCI Hospitality and CAVA Group,

0.6

Correlation Coefficient

RCI Hospitality  CAVA Group,

Poor diversification

The 3 months correlation between RCI and CAVA is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and CAVA Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAVA 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 CAVA Group,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAVA Group, has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and CAVA Group, go up and down completely randomly.

Pair Corralation between RCI Hospitality and CAVA Group,

Given the investment horizon of 90 days RCI Hospitality is expected to generate 1.31 times less return on investment than CAVA Group,. In addition to that, RCI Hospitality is 1.17 times more volatile than CAVA Group,. It trades about 0.13 of its total potential returns per unit of risk. CAVA Group, is currently generating about 0.2 per unit of volatility. If you would invest  11,192  in CAVA Group, on August 31, 2024 and sell it today you would earn a total of  2,928  from holding CAVA Group, or generate 26.16% return on investment over 90 days.

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

RCI Hospitality Holdings  vs.  CAVA 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.

CAVA Group,

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CAVA Group, are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, CAVA Group, sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RCI Hospitality and CAVA Group,

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

The idea behind RCI Hospitality Holdings and CAVA 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..