Correlation Between RCI Hospitality and FLUOR

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

Diversification Opportunities for RCI Hospitality and FLUOR

-0.23

Correlation Coefficient

RCI Hospitality  FLUOR

Very good diversification

The 3 months correlation between RCI and FLUOR is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and FLUOR P NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLUOR P NEW 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 FLUOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLUOR P NEW has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and FLUOR go up and down completely randomly.

Pair Corralation between RCI Hospitality and FLUOR

Given the investment horizon of 90 days RCI Hospitality Holdings is expected to generate 5.27 times more return on investment than FLUOR. However, RCI Hospitality is 5.27 times more volatile than FLUOR P NEW. It trades about 0.11 of its potential returns per unit of risk. FLUOR P NEW is currently generating about -0.11 per unit of risk. If you would invest  4,566  in RCI Hospitality Holdings on September 17, 2024 and sell it today you would earn a total of  652.00  from holding RCI Hospitality Holdings or generate 14.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.85%
Values	Daily Returns

RCI Hospitality Holdings  vs.  FLUOR P NEW

RCI Hospitality Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RCI Hospitality Holdings are ranked lower than 8 (%) 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.

FLUOR P NEW

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with RCI Hospitality and FLUOR

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

The idea behind RCI Hospitality Holdings and FLUOR P NEW 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .