Correlation Between Dennys Corp and Herc Holdings
Can any of the company-specific risk be diversified away by investing in both Dennys Corp and Herc Holdings 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 Herc Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dennys Corp and Herc Holdings, you can compare the effects of market volatilities on Dennys Corp and Herc Holdings 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 Herc Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dennys Corp and Herc Holdings.
Diversification Opportunities for Dennys Corp and Herc Holdings
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dennys and Herc is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dennys Corp and Herc Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herc 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 Herc Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herc Holdings has no effect on the direction of Dennys Corp i.e., Dennys Corp and Herc Holdings go up and down completely randomly.
Pair Corralation between Dennys Corp and Herc Holdings
Given the investment horizon of 90 days Dennys Corp is expected to under-perform the Herc Holdings. In addition to that, Dennys Corp is 1.1 times more volatile than Herc Holdings. It trades about -0.04 of its total potential returns per unit of risk. Herc Holdings is currently generating about 0.15 per unit of volatility. If you would invest 21,035 in Herc Holdings on August 31, 2024 and sell it today you would earn a total of 1,940 from holding Herc Holdings or generate 9.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dennys Corp vs. Herc Holdings
Performance |
| Timeline |
| Dennys Corp |
| Herc Holdings |
Dennys Corp and Herc Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dennys Corp and Herc Holdings
The main advantage of trading using opposite Dennys Corp and Herc Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dennys Corp position performs unexpectedly, Herc Holdings 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 Herc Holdings will offset losses from the drop in Herc Holdings' long position.| Dennys Corp vs. Brinker International | Dennys Corp vs. Bloomin Brands | Dennys Corp vs. Jack In The | Dennys Corp vs. BJs Restaurants |
| Herc Holdings vs. McGrath RentCorp | Herc Holdings vs. Alta Equipment Group | Herc Holdings vs. Custom Truck One | Herc Holdings vs. GATX Corporation |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |