Correlation Between Dennys Corp and La Rosa
Can any of the company-specific risk be diversified away by investing in both Dennys Corp and La Rosa 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 La Rosa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dennys Corp and La Rosa Holdings, you can compare the effects of market volatilities on Dennys Corp and La Rosa 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 La Rosa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dennys Corp and La Rosa.
Diversification Opportunities for Dennys Corp and La Rosa
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dennys and LRHC is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dennys Corp and La Rosa Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La Rosa 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 La Rosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La Rosa Holdings has no effect on the direction of Dennys Corp i.e., Dennys Corp and La Rosa go up and down completely randomly.
Pair Corralation between Dennys Corp and La Rosa
Given the investment horizon of 90 days Dennys Corp is expected to generate 0.32 times more return on investment than La Rosa. However, Dennys Corp is 3.08 times less risky than La Rosa. It trades about -0.07 of its potential returns per unit of risk. La Rosa Holdings is currently generating about -0.04 per unit of risk. If you would invest 588.00 in Dennys Corp on January 7, 2025 and sell it today you would lose (251.00) from holding Dennys Corp or give up 42.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dennys Corp vs. La Rosa Holdings
Performance |
| Timeline |
| Dennys Corp |
| La Rosa Holdings |
Dennys Corp and La Rosa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dennys Corp and La Rosa
The main advantage of trading using opposite Dennys Corp and La Rosa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dennys Corp position performs unexpectedly, La Rosa 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 La Rosa will offset losses from the drop in La Rosa's long position.| Dennys Corp vs. Brinker International | Dennys Corp vs. Bloomin Brands | Dennys Corp vs. Jack In The | Dennys Corp vs. BJs Restaurants |
| La Rosa vs. Starwin Media Holdings | La Rosa vs. Romana Food Brands | La Rosa vs. Vital Farms | La Rosa vs. Glacier Media |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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