Correlation Between Dennys Corp and GameStop Corp
Can any of the company-specific risk be diversified away by investing in both Dennys Corp and GameStop Corp 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 GameStop Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dennys Corp and GameStop Corp, you can compare the effects of market volatilities on Dennys Corp and GameStop Corp 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 GameStop Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dennys Corp and GameStop Corp.
Diversification Opportunities for Dennys Corp and GameStop Corp
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dennys and GameStop is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Dennys Corp and GameStop Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameStop Corp 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 GameStop Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GameStop Corp has no effect on the direction of Dennys Corp i.e., Dennys Corp and GameStop Corp go up and down completely randomly.
Pair Corralation between Dennys Corp and GameStop Corp
Given the investment horizon of 90 days Dennys Corp is expected to generate 30.55 times less return on investment than GameStop Corp. But when comparing it to its historical volatility, Dennys Corp is 1.07 times less risky than GameStop Corp. It trades about 0.01 of its potential returns per unit of risk. GameStop Corp is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 2,233 in GameStop Corp on September 3, 2024 and sell it today you would earn a total of 672.00 from holding GameStop Corp or generate 30.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dennys Corp vs. GameStop Corp
Performance |
| Timeline |
| Dennys Corp |
| GameStop Corp |
Dennys Corp and GameStop Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dennys Corp and GameStop Corp
The main advantage of trading using opposite Dennys Corp and GameStop Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dennys Corp position performs unexpectedly, GameStop Corp 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 GameStop Corp will offset losses from the drop in GameStop Corp's long position.| Dennys Corp vs. Brinker International | Dennys Corp vs. Bloomin Brands | Dennys Corp vs. Jack In The | Dennys Corp vs. BJs Restaurants |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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