Correlation Between TRAVEL + and RCI Hospitality

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

By analyzing existing cross correlation between TRAVEL LEISURE DL 01 and RCI Hospitality Holdings, you can compare the effects of market volatilities on TRAVEL + 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 TRAVEL + with a short position of RCI Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVEL + and RCI Hospitality.

Diversification Opportunities for TRAVEL + and RCI Hospitality

0.17

Correlation Coefficient

TRAVEL +  RCI Hospitality

Average diversification

The 3 months correlation between TRAVEL and RCI is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 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 TRAVEL + 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 TRAVEL LEISURE DL 01 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 TRAVEL + i.e., TRAVEL + and RCI Hospitality go up and down completely randomly.

Pair Corralation between TRAVEL + and RCI Hospitality

Assuming the 90 days trading horizon TRAVEL LEISURE DL 01 is expected to generate 0.8 times more return on investment than RCI Hospitality. However, TRAVEL LEISURE DL 01 is 1.24 times less risky than RCI Hospitality. It trades about 0.28 of its potential returns per unit of risk. RCI Hospitality Holdings is currently generating about 0.04 per unit of risk. If you would invest  3,599  in TRAVEL LEISURE DL 01 on April 15, 2025 and sell it today you would earn a total of  1,341  from holding TRAVEL LEISURE DL 01 or generate 37.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

TRAVEL LEISURE DL 01  vs.  RCI Hospitality Holdings

TRAVEL LEISURE DL

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, TRAVEL + reported solid returns over the last few months and may actually be approaching a breakup point.

RCI Hospitality Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RCI Hospitality Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, RCI Hospitality is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with TRAVEL + and RCI Hospitality

The main advantage of trading using opposite TRAVEL + and RCI Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAVEL + 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 TRAVEL LEISURE DL 01 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.