Correlation Between Dennys Corp and Viemed Healthcare
Can any of the company-specific risk be diversified away by investing in both Dennys Corp and Viemed Healthcare 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 Viemed Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dennys Corp and Viemed Healthcare, you can compare the effects of market volatilities on Dennys Corp and Viemed Healthcare 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 Viemed Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dennys Corp and Viemed Healthcare.
Diversification Opportunities for Dennys Corp and Viemed Healthcare
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dennys and Viemed is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Dennys Corp and Viemed Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viemed Healthcare 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 Viemed Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viemed Healthcare has no effect on the direction of Dennys Corp i.e., Dennys Corp and Viemed Healthcare go up and down completely randomly.
Pair Corralation between Dennys Corp and Viemed Healthcare
Given the investment horizon of 90 days Dennys Corp is expected to under-perform the Viemed Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Dennys Corp is 1.03 times less risky than Viemed Healthcare. The stock trades about -0.03 of its potential returns per unit of risk. The Viemed Healthcare is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 714.00 in Viemed Healthcare on August 30, 2024 and sell it today you would earn a total of 142.00 from holding Viemed Healthcare or generate 19.89% 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. Viemed Healthcare
Performance |
| Timeline |
| Dennys Corp |
| Viemed Healthcare |
Dennys Corp and Viemed Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dennys Corp and Viemed Healthcare
The main advantage of trading using opposite Dennys Corp and Viemed Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dennys Corp position performs unexpectedly, Viemed Healthcare 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 Viemed Healthcare will offset losses from the drop in Viemed Healthcare's long position.The idea behind Dennys Corp and Viemed Healthcare pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Viemed Healthcare vs. Profound Medical Corp | Viemed Healthcare vs. Si Bone | Viemed Healthcare vs. IRIDEX | Viemed Healthcare vs. SurModics |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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