Correlation Between Dennys Corp and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Dennys Corp and KeyCorp 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 KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dennys Corp and KeyCorp, you can compare the effects of market volatilities on Dennys Corp and KeyCorp 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 KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dennys Corp and KeyCorp.
Diversification Opportunities for Dennys Corp and KeyCorp
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dennys and KeyCorp is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Dennys Corp and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp 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 KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of Dennys Corp i.e., Dennys Corp and KeyCorp go up and down completely randomly.
Pair Corralation between Dennys Corp and KeyCorp
Given the investment horizon of 90 days Dennys Corp is expected to generate 4.42 times more return on investment than KeyCorp. However, Dennys Corp is 4.42 times more volatile than KeyCorp. It trades about 0.03 of its potential returns per unit of risk. KeyCorp is currently generating about 0.09 per unit of risk. If you would invest 651.00 in Dennys Corp on September 2, 2024 and sell it today you would earn a total of 5.00 from holding Dennys Corp or generate 0.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dennys Corp vs. KeyCorp
Performance |
| Timeline |
| Dennys Corp |
| KeyCorp |
Dennys Corp and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dennys Corp and KeyCorp
The main advantage of trading using opposite Dennys Corp and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dennys Corp position performs unexpectedly, KeyCorp 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 KeyCorp will offset losses from the drop in KeyCorp's long position.| Dennys Corp vs. Brinker International | Dennys Corp vs. Bloomin Brands | Dennys Corp vs. Jack In The | Dennys Corp vs. BJs Restaurants |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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