Correlation Between Dennys Corp and RCI Hospitality
Can any of the company-specific risk be diversified away by investing in both Dennys Corp and RCI Hospitality 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 RCI Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dennys Corp and RCI Hospitality Holdings, you can compare the effects of market volatilities on Dennys Corp and RCI Hospitality 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 RCI Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dennys Corp and RCI Hospitality.
Diversification Opportunities for Dennys Corp and RCI Hospitality
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dennys and RCI is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dennys Corp and RCI Hospitality Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCI Hospitality 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 RCI Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCI Hospitality Holdings has no effect on the direction of Dennys Corp i.e., Dennys Corp and RCI Hospitality go up and down completely randomly.
Pair Corralation between Dennys Corp and RCI Hospitality
Given the investment horizon of 90 days Dennys Corp is expected to under-perform the RCI Hospitality. But the stock apears to be less risky and, when comparing its historical volatility, Dennys Corp is 1.01 times less risky than RCI Hospitality. The stock trades about -0.11 of its potential returns per unit of risk. The RCI Hospitality Holdings is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 4,470 in RCI Hospitality Holdings on August 27, 2024 and sell it today you would earn a total of 851.00 from holding RCI Hospitality Holdings or generate 19.04% 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. RCI Hospitality Holdings
Performance |
| Timeline |
| Dennys Corp |
| RCI Hospitality Holdings |
Dennys Corp and RCI Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dennys Corp and RCI Hospitality
The main advantage of trading using opposite Dennys Corp and RCI Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dennys Corp position performs unexpectedly, RCI Hospitality 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 RCI Hospitality will offset losses from the drop in RCI Hospitality's long position.| Dennys Corp vs. Brinker International | Dennys Corp vs. Bloomin Brands | Dennys Corp vs. Jack In The | Dennys Corp vs. BJs Restaurants |
| RCI Hospitality vs. Brinker International | RCI Hospitality vs. Bloomin Brands | RCI Hospitality vs. BJs Restaurants | RCI Hospitality vs. Dennys Corp |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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