Correlation Between Dine Brands and Cadence Design
Can any of the company-specific risk be diversified away by investing in both Dine Brands and Cadence Design 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 Cadence Design 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 Cadence Design Systems, you can compare the effects of market volatilities on Dine Brands and Cadence Design 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 Cadence Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dine Brands and Cadence Design.
Diversification Opportunities for Dine Brands and Cadence Design
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dine and Cadence is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dine Brands Global and Cadence Design Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadence Design Systems 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 Cadence Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadence Design Systems has no effect on the direction of Dine Brands i.e., Dine Brands and Cadence Design go up and down completely randomly.
Pair Corralation between Dine Brands and Cadence Design
Considering the 90-day investment horizon Dine Brands Global is expected to under-perform the Cadence Design. In addition to that, Dine Brands is 1.02 times more volatile than Cadence Design Systems. It trades about -0.2 of its total potential returns per unit of risk. Cadence Design Systems is currently generating about -0.14 per unit of volatility. If you would invest 31,325 in Cadence Design Systems on December 3, 2024 and sell it today you would lose (6,744) from holding Cadence Design Systems or give up 21.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dine Brands Global vs. Cadence Design Systems
Performance |
| Timeline |
| Dine Brands Global |
| Cadence Design Systems |
Dine Brands and Cadence Design Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dine Brands and Cadence Design
The main advantage of trading using opposite Dine Brands and Cadence Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dine Brands position performs unexpectedly, Cadence Design 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 Cadence Design will offset losses from the drop in Cadence Design's long position.| Dine Brands vs. Bloomin Brands | Dine Brands vs. BJs Restaurants | Dine Brands vs. The Cheesecake Factory | Dine Brands vs. Brinker International |
| Cadence Design vs. Workday | Cadence Design vs. Salesforce | Cadence Design vs. Intuit Inc | Cadence Design vs. Snowflake |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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