Correlation Between Dine Brands and CF Industries
Can any of the company-specific risk be diversified away by investing in both Dine Brands and CF Industries 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 CF Industries 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 CF Industries Holdings, you can compare the effects of market volatilities on Dine Brands and CF Industries 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 CF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dine Brands and CF Industries.
Diversification Opportunities for Dine Brands and CF Industries
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dine and CF Industries is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Dine Brands Global and CF Industries Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Industries Holdings 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 CF Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Industries Holdings has no effect on the direction of Dine Brands i.e., Dine Brands and CF Industries go up and down completely randomly.
Pair Corralation between Dine Brands and CF Industries
Considering the 90-day investment horizon Dine Brands Global is expected to under-perform the CF Industries. In addition to that, Dine Brands is 1.47 times more volatile than CF Industries Holdings. It trades about -0.15 of its total potential returns per unit of risk. CF Industries Holdings is currently generating about -0.01 per unit of volatility. If you would invest 8,738 in CF Industries Holdings on September 19, 2024 and sell it today you would lose (70.00) from holding CF Industries Holdings or give up 0.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dine Brands Global vs. CF Industries Holdings
Performance |
| Timeline |
| Dine Brands Global |
| CF Industries Holdings |
Dine Brands and CF Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dine Brands and CF Industries
The main advantage of trading using opposite Dine Brands and CF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dine Brands position performs unexpectedly, CF Industries 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 CF Industries will offset losses from the drop in CF Industries' long position.| Dine Brands vs. Bloomin Brands | Dine Brands vs. BJs Restaurants | Dine Brands vs. The Cheesecake Factory | Dine Brands 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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