Correlation Between BrightSpring Health and Dine Brands
Can any of the company-specific risk be diversified away by investing in both BrightSpring Health 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 BrightSpring Health and Dine Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BrightSpring Health Services, and Dine Brands Global, you can compare the effects of market volatilities on BrightSpring Health 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 BrightSpring Health with a short position of Dine Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of BrightSpring Health and Dine Brands.
Diversification Opportunities for BrightSpring Health and Dine Brands
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BrightSpring and Dine is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding BrightSpring Health Services, 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 BrightSpring Health 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 BrightSpring Health Services, 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 BrightSpring Health i.e., BrightSpring Health and Dine Brands go up and down completely randomly.
Pair Corralation between BrightSpring Health and Dine Brands
Assuming the 90 days horizon BrightSpring Health is expected to generate 1.7 times less return on investment than Dine Brands. But when comparing it to its historical volatility, BrightSpring Health Services, is 2.13 times less risky than Dine Brands. It trades about 0.26 of its potential returns per unit of risk. Dine Brands Global is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,985 in Dine Brands Global on September 4, 2024 and sell it today you would earn a total of 556.00 from holding Dine Brands Global or generate 18.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BrightSpring Health Services, vs. Dine Brands Global
Performance |
| Timeline |
| BrightSpring Health |
| Dine Brands Global |
BrightSpring Health and Dine Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BrightSpring Health and Dine Brands
The main advantage of trading using opposite BrightSpring Health and Dine Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BrightSpring Health 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.| BrightSpring Health vs. Ecolab Inc | BrightSpring Health vs. Nextnav Acquisition Corp | BrightSpring Health vs. NL Industries | BrightSpring Health vs. Flex |
| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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