Correlation Between Arcos Dorados and Dine Brands
Can any of the company-specific risk be diversified away by investing in both Arcos Dorados and Dine Brands 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 Arcos Dorados and Dine Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arcos Dorados Holdings and Dine Brands Global, you can compare the effects of market volatilities on Arcos Dorados and Dine Brands 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 Arcos Dorados with a short position of Dine Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arcos Dorados and Dine Brands.
Diversification Opportunities for Arcos Dorados and Dine Brands
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Arcos and Dine is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Arcos Dorados Holdings and Dine Brands Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dine Brands Global and Arcos Dorados 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 Arcos Dorados Holdings are associated (or correlated) with Dine Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dine Brands Global has no effect on the direction of Arcos Dorados i.e., Arcos Dorados and Dine Brands go up and down completely randomly.
Pair Corralation between Arcos Dorados and Dine Brands
Given the investment horizon of 90 days Arcos Dorados Holdings is expected to generate 0.85 times more return on investment than Dine Brands. However, Arcos Dorados Holdings is 1.17 times less risky than Dine Brands. It trades about 0.01 of its potential returns per unit of risk. Dine Brands Global is currently generating about -0.04 per unit of risk. If you would invest 784.00 in Arcos Dorados Holdings on August 31, 2024 and sell it today you would earn a total of 25.00 from holding Arcos Dorados Holdings or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arcos Dorados Holdings vs. Dine Brands Global
Performance |
| Timeline |
| Arcos Dorados Holdings |
| Dine Brands Global |
Arcos Dorados and Dine Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arcos Dorados and Dine Brands
The main advantage of trading using opposite Arcos Dorados and Dine Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arcos Dorados position performs unexpectedly, Dine Brands 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 Dine Brands will offset losses from the drop in Dine Brands' long position.| Arcos Dorados vs. BJs Restaurants | Arcos Dorados vs. Dine Brands Global | Arcos Dorados vs. Brinker International | Arcos Dorados vs. Bloomin Brands |
| Dine Brands vs. Bloomin Brands | Dine Brands vs. BJs Restaurants | Dine Brands vs. The Cheesecake Factory | Dine Brands vs. Brinker International |
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 the Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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