Correlation Between Dine Brands and FormFactor
Can any of the company-specific risk be diversified away by investing in both Dine Brands and FormFactor 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 FormFactor 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 FormFactor, you can compare the effects of market volatilities on Dine Brands and FormFactor 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 FormFactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dine Brands and FormFactor.
Diversification Opportunities for Dine Brands and FormFactor
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dine and FormFactor is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Dine Brands Global and FormFactor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FormFactor 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 FormFactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FormFactor has no effect on the direction of Dine Brands i.e., Dine Brands and FormFactor go up and down completely randomly.
Pair Corralation between Dine Brands and FormFactor
Considering the 90-day investment horizon Dine Brands Global is expected to under-perform the FormFactor. But the stock apears to be less risky and, when comparing its historical volatility, Dine Brands Global is 1.21 times less risky than FormFactor. The stock trades about -0.04 of its potential returns per unit of risk. The FormFactor is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,107 in FormFactor on September 2, 2024 and sell it today you would earn a total of 899.00 from holding FormFactor or generate 28.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dine Brands Global vs. FormFactor
Performance |
| Timeline |
| Dine Brands Global |
| FormFactor |
Dine Brands and FormFactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dine Brands and FormFactor
The main advantage of trading using opposite Dine Brands and FormFactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dine Brands position performs unexpectedly, FormFactor 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 FormFactor will offset losses from the drop in FormFactor's long position.| Dine Brands vs. Bloomin Brands | Dine Brands vs. BJs Restaurants | Dine Brands vs. The Cheesecake Factory | Dine Brands vs. Brinker International |
| FormFactor vs. NXP Semiconductors NV | FormFactor vs. GSI Technology | FormFactor vs. MaxLinear | FormFactor vs. Texas Instruments Incorporated |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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