Correlation Between Dennys Corp and BBB Foods
Can any of the company-specific risk be diversified away by investing in both Dennys Corp and BBB Foods 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 BBB Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dennys Corp and BBB Foods, you can compare the effects of market volatilities on Dennys Corp and BBB Foods 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 BBB Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dennys Corp and BBB Foods.
Diversification Opportunities for Dennys Corp and BBB Foods
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dennys and BBB is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Dennys Corp and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods 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 BBB Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBB Foods has no effect on the direction of Dennys Corp i.e., Dennys Corp and BBB Foods go up and down completely randomly.
Pair Corralation between Dennys Corp and BBB Foods
Given the investment horizon of 90 days Dennys Corp is expected to generate 0.99 times more return on investment than BBB Foods. However, Dennys Corp is 1.01 times less risky than BBB Foods. It trades about -0.04 of its potential returns per unit of risk. BBB Foods is currently generating about -0.14 per unit of risk. If you would invest 657.00 in Dennys Corp on September 5, 2024 and sell it today you would lose (24.00) from holding Dennys Corp or give up 3.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dennys Corp vs. BBB Foods
Performance |
| Timeline |
| Dennys Corp |
| BBB Foods |
Dennys Corp and BBB Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dennys Corp and BBB Foods
The main advantage of trading using opposite Dennys Corp and BBB Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dennys Corp position performs unexpectedly, BBB Foods 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 BBB Foods will offset losses from the drop in BBB Foods' long position.| Dennys Corp vs. Brinker International | Dennys Corp vs. Bloomin Brands | Dennys Corp vs. Jack In The | Dennys Corp vs. BJs Restaurants |
| BBB Foods vs. Flexible Solutions International | BBB Foods vs. Chester Mining | BBB Foods vs. Minerals Technologies | BBB Foods vs. Stepan Company |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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