Correlation Between Dine Brands and Cheesecake Factory
Can any of the company-specific risk be diversified away by investing in both Dine Brands and Cheesecake Factory 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 Dine Brands and Cheesecake Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dine Brands Global and The Cheesecake Factory, you can compare the effects of market volatilities on Dine Brands and Cheesecake Factory 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 Dine Brands with a short position of Cheesecake Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dine Brands and Cheesecake Factory.
Diversification Opportunities for Dine Brands and Cheesecake Factory
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dine and Cheesecake is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Dine Brands Global and The Cheesecake Factory in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Cheesecake Factory and Dine Brands 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 Dine Brands Global are associated (or correlated) with Cheesecake Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Cheesecake Factory has no effect on the direction of Dine Brands i.e., Dine Brands and Cheesecake Factory go up and down completely randomly.
Pair Corralation between Dine Brands and Cheesecake Factory
Considering the 90-day investment horizon Dine Brands Global is expected to under-perform the Cheesecake Factory. In addition to that, Dine Brands is 1.18 times more volatile than The Cheesecake Factory. It trades about -0.06 of its total potential returns per unit of risk. The Cheesecake Factory is currently generating about 0.03 per unit of volatility. If you would invest 3,705 in The Cheesecake Factory on August 27, 2024 and sell it today you would earn a total of 951.00 from holding The Cheesecake Factory or generate 25.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dine Brands Global vs. The Cheesecake Factory
Performance |
| Timeline |
| Dine Brands Global |
| The Cheesecake Factory |
Dine Brands and Cheesecake Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dine Brands and Cheesecake Factory
The main advantage of trading using opposite Dine Brands and Cheesecake Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dine Brands position performs unexpectedly, Cheesecake Factory 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 Cheesecake Factory will offset losses from the drop in Cheesecake Factory's long position.| Dine Brands vs. Bloomin Brands | Dine Brands vs. BJs Restaurants | Dine Brands vs. The Cheesecake Factory | Dine Brands vs. Brinker International |
| Cheesecake Factory vs. Dine Brands Global | Cheesecake Factory vs. Bloomin Brands | Cheesecake Factory vs. BJs Restaurants | Cheesecake Factory vs. Brinker International |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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