Correlation Between Dennys Corp and National Vision
Can any of the company-specific risk be diversified away by investing in both Dennys Corp and National Vision 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 National Vision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dennys Corp and National Vision Holdings, you can compare the effects of market volatilities on Dennys Corp and National Vision 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 National Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dennys Corp and National Vision.
Diversification Opportunities for Dennys Corp and National Vision
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dennys and National is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Dennys Corp and National Vision Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Vision Holdings 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 National Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Vision Holdings has no effect on the direction of Dennys Corp i.e., Dennys Corp and National Vision go up and down completely randomly.
Pair Corralation between Dennys Corp and National Vision
Given the investment horizon of 90 days Dennys Corp is expected to generate 0.74 times more return on investment than National Vision. However, Dennys Corp is 1.36 times less risky than National Vision. It trades about -0.02 of its potential returns per unit of risk. National Vision Holdings is currently generating about -0.05 per unit of risk. If you would invest 1,018 in Dennys Corp on September 3, 2024 and sell it today you would lose (362.00) from holding Dennys Corp or give up 35.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dennys Corp vs. National Vision Holdings
Performance |
| Timeline |
| Dennys Corp |
| National Vision Holdings |
Dennys Corp and National Vision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dennys Corp and National Vision
The main advantage of trading using opposite Dennys Corp and National Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dennys Corp position performs unexpectedly, National Vision 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 National Vision will offset losses from the drop in National Vision's long position.| Dennys Corp vs. Brinker International | Dennys Corp vs. Bloomin Brands | Dennys Corp vs. Jack In The | Dennys Corp vs. BJs Restaurants |
| National Vision vs. Sally Beauty Holdings | National Vision vs. MarineMax | National Vision vs. Sportsmans | National Vision vs. 1 800 FLOWERSCOM |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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