Correlation Between Rave Restaurant and Plumb Balanced

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

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

Diversification Opportunities for Rave Restaurant and Plumb Balanced

0.0

Correlation Coefficient

Rave Restaurant  Plumb Balanced

Pay attention - limited upside

The 3 months correlation between Rave and Plumb is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Rave Restaurant Group and Plumb Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plumb Balanced and Rave Restaurant 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 Rave Restaurant Group are associated (or correlated) with Plumb Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plumb Balanced has no effect on the direction of Rave Restaurant i.e., Rave Restaurant and Plumb Balanced go up and down completely randomly.

Pair Corralation between Rave Restaurant and Plumb Balanced

If you would invest  195.00  in Rave Restaurant Group on January 20, 2024 and sell it today you would earn a total of  11.00  from holding Rave Restaurant Group or generate 5.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Rave Restaurant Group  vs.  Plumb Balanced Fund

Rave Restaurant Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rave Restaurant Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Rave Restaurant is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Plumb Balanced

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Plumb Balanced Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Plumb Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rave Restaurant and Plumb Balanced

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

The idea behind Rave Restaurant Group and Plumb Balanced Fund 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.