Correlation Between DTRGR and RCI Hospitality

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

By analyzing existing cross correlation between DTRGR 35 07 APR 25 and RCI Hospitality Holdings, you can compare the effects of market volatilities on DTRGR and RCI Hospitality 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 DTRGR with a short position of RCI Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTRGR and RCI Hospitality.

Diversification Opportunities for DTRGR and RCI Hospitality

0.93

Correlation Coefficient

DTRGR  RCI Hospitality

Almost no diversification

The 3 months correlation between DTRGR and RCI is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding DTRGR 35 07 APR 25 and RCI Hospitality Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCI Hospitality Holdings and DTRGR 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 DTRGR 35 07 APR 25 are associated (or correlated) with RCI Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCI Hospitality Holdings has no effect on the direction of DTRGR i.e., DTRGR and RCI Hospitality go up and down completely randomly.

Pair Corralation between DTRGR and RCI Hospitality

Assuming the 90 days trading horizon DTRGR is expected to generate 31.39 times less return on investment than RCI Hospitality. But when comparing it to its historical volatility, DTRGR 35 07 APR 25 is 60.39 times less risky than RCI Hospitality. It trades about 0.3 of its potential returns per unit of risk. RCI Hospitality Holdings is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  4,515  in RCI Hospitality Holdings on September 23, 2024 and sell it today you would earn a total of  1,165  from holding RCI Hospitality Holdings or generate 25.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	29.23%
Values	Daily Returns

DTRGR 35 07 APR 25  vs.  RCI Hospitality Holdings

DTRGR 35 07

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DTRGR 35 07 APR 25 are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, DTRGR is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

RCI Hospitality Holdings

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with DTRGR and RCI Hospitality

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

The idea behind DTRGR 35 07 APR 25 and RCI Hospitality Holdings 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.