Correlation Between Rave Restaurant and Scripps Networks

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

Diversification Opportunities for Rave Restaurant and Scripps Networks

0.0

Correlation Coefficient

Rave Restaurant  Scripps Networks

Pay attention - limited upside

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

Pair Corralation between Rave Restaurant and Scripps Networks

If you would invest  165.00  in Rave Restaurant Group on January 31, 2024 and sell it today you would earn a total of  42.00  from holding Rave Restaurant Group or generate 25.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Rave Restaurant Group  vs.  Scripps Networks Interactive

Rave Restaurant Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rave Restaurant Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Rave Restaurant may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Scripps Networks Int

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scripps Networks Interactive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Scripps Networks is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Rave Restaurant and Scripps Networks

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

The idea behind Rave Restaurant Group and Scripps Networks Interactive 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 Transaction History module to view history of all your transactions and understand their impact on performance.