Correlation Between Dennys Corp and Bank of America
Can any of the company-specific risk be diversified away by investing in both Dennys Corp and Bank of America 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 Dennys Corp and Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dennys Corp and Bank of America, you can compare the effects of market volatilities on Dennys Corp and Bank of America 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 Dennys Corp with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dennys Corp and Bank of America.
Diversification Opportunities for Dennys Corp and Bank of America
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dennys and Bank is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Dennys Corp and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America and Dennys Corp 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 Dennys Corp are associated (or correlated) with Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of America has no effect on the direction of Dennys Corp i.e., Dennys Corp and Bank of America go up and down completely randomly.
Pair Corralation between Dennys Corp and Bank of America
Given the investment horizon of 90 days Dennys Corp is expected to under-perform the Bank of America. In addition to that, Dennys Corp is 8.63 times more volatile than Bank of America. It trades about -0.18 of its total potential returns per unit of risk. Bank of America is currently generating about -0.01 per unit of volatility. If you would invest 125,301 in Bank of America on September 12, 2024 and sell it today you would lose (98.00) from holding Bank of America or give up 0.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dennys Corp vs. Bank of America
Performance |
| Timeline |
| Dennys Corp |
| Bank of America |
Dennys Corp and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dennys Corp and Bank of America
The main advantage of trading using opposite Dennys Corp and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dennys Corp position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| Dennys Corp vs. Noble Romans | Dennys Corp vs. Flanigans Enterprises | Dennys Corp vs. FAT Brands | Dennys Corp vs. El Pollo Loco |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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