Correlation Between Rave Restaurant and Simply Good

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Rave Restaurant and Simply Good 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 Simply Good 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 The Simply Good, you can compare the effects of market volatilities on Rave Restaurant and Simply Good 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 Simply Good. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rave Restaurant and Simply Good.

Diversification Opportunities for Rave Restaurant and Simply Good

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Rave Restaurant and Simply is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Rave Restaurant Group and The Simply Good in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simply Good 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 Simply Good. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simply Good has no effect on the direction of Rave Restaurant i.e., Rave Restaurant and Simply Good go up and down completely randomly.

Pair Corralation between Rave Restaurant and Simply Good

Given the investment horizon of 90 days Rave Restaurant Group is expected to generate 2.19 times more return on investment than Simply Good. However, Rave Restaurant is 2.19 times more volatile than The Simply Good. It trades about 0.09 of its potential returns per unit of risk. The Simply Good is currently generating about 0.17 per unit of risk. If you would invest  139.00  in Rave Restaurant Group on August 30, 2022 and sell it today you would earn a total of  23.00  from holding Rave Restaurant Group or generate 16.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy97.67%
ValuesDaily Returns

Rave Restaurant Group  vs.  The Simply Good

 Performance (%) 
       Timeline  
Rave Restaurant Group 
Rave Restaurant Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Rave Restaurant Group are ranked lower than 9 (%) 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

Simply Good 
Simply Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in The Simply Good are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Simply Good revealed solid returns over the last few months and may actually be approaching a breakup point.

Simply Price Channel

Rave Restaurant and Simply Good Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Rave Restaurant and Simply Good

The main advantage of trading using opposite Rave Restaurant and Simply Good positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rave Restaurant position performs unexpectedly, Simply Good 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 Simply Good will offset losses from the drop in Simply Good's long position.
Rave Restaurant vs. McDonalds Corp
Rave Restaurant vs. Starbucks Corp
Rave Restaurant vs. Chipotle Mexican Grill
Rave Restaurant vs. Yum Brands
The idea behind Rave Restaurant Group and The Simply Good 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.
Simply Good vs. General Mills
Simply Good vs. Kraft Heinz
Simply Good vs. Hormel Foods Corp
Simply Good vs. Kellogg Company
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

Other Complementary Tools

Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Equity Valuation
Check real value of public entities based on technical and fundamental data
Go
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Go