Correlation Between Rave Restaurant and Bnp Paribas

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

Diversification Opportunities for Rave Restaurant and Bnp Paribas

-0.02
  Correlation Coefficient

Good diversification

The 3 months correlation between Rave Restaurant and BNPQF is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Rave Restaurant Group and Bnp Paribas Ord in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bnp Paribas Ord 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 Bnp Paribas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bnp Paribas Ord has no effect on the direction of Rave Restaurant i.e., Rave Restaurant and Bnp Paribas go up and down completely randomly.

Pair Corralation between Rave Restaurant and Bnp Paribas

Given the investment horizon of 90 days Rave Restaurant Group is expected to generate 1.05 times more return on investment than Bnp Paribas. However, Rave Restaurant is 1.05 times more volatile than Bnp Paribas Ord. It trades about 0.06 of its potential returns per unit of risk. Bnp Paribas Ord is currently generating about 0.01 per unit of risk. If you would invest  113.00  in Rave Restaurant Group on August 29, 2022 and sell it today you would earn a total of  49.00  from holding Rave Restaurant Group or generate 43.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Rave Restaurant Group  vs.  Bnp Paribas Ord

 Performance (%) 
       Timeline  
Rave Restaurant Group 
Rave Restaurant Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Rave Restaurant Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Rave Restaurant exhibited solid returns over the last few months and may actually be approaching a breakup point.

Rave Restaurant Price Channel

Bnp Paribas Ord 
BNPQF Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bnp Paribas Ord are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Bnp Paribas exhibited solid returns over the last few months and may actually be approaching a breakup point.

BNPQF Price Channel

Rave Restaurant and Bnp Paribas Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Rave Restaurant and Bnp Paribas

The main advantage of trading using opposite Rave Restaurant and Bnp Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rave Restaurant position performs unexpectedly, Bnp Paribas 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 Bnp Paribas will offset losses from the drop in Bnp Paribas' long position.
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The idea behind Rave Restaurant Group and Bnp Paribas Ord 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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Check out your portfolio center. 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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