Correlation Between Dennys Corp and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Dennys Corp and Harmony Gold 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 Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dennys Corp and Harmony Gold Mining, you can compare the effects of market volatilities on Dennys Corp and Harmony Gold 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 Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dennys Corp and Harmony Gold.
Diversification Opportunities for Dennys Corp and Harmony Gold
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dennys and Harmony is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Dennys Corp and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining 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 Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of Dennys Corp i.e., Dennys Corp and Harmony Gold go up and down completely randomly.
Pair Corralation between Dennys Corp and Harmony Gold
Given the investment horizon of 90 days Dennys Corp is expected to generate 7.68 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, Dennys Corp is 1.03 times less risky than Harmony Gold. It trades about 0.03 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 827.00 in Harmony Gold Mining on November 3, 2024 and sell it today you would earn a total of 122.00 from holding Harmony Gold Mining or generate 14.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dennys Corp vs. Harmony Gold Mining
Performance |
| Timeline |
| Dennys Corp |
| Harmony Gold Mining |
Dennys Corp and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dennys Corp and Harmony Gold
The main advantage of trading using opposite Dennys Corp and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dennys Corp position performs unexpectedly, Harmony Gold 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 Harmony Gold will offset losses from the drop in Harmony Gold'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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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