Correlation Between Dine Brands and Gap,
Can any of the company-specific risk be diversified away by investing in both Dine Brands and Gap, 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 Gap, 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 Gap,, you can compare the effects of market volatilities on Dine Brands and Gap, 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 Gap,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dine Brands and Gap,.
Diversification Opportunities for Dine Brands and Gap,
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dine and Gap, is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dine Brands Global and The Gap, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap, 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 Gap,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap, has no effect on the direction of Dine Brands i.e., Dine Brands and Gap, go up and down completely randomly.
Pair Corralation between Dine Brands and Gap,
Considering the 90-day investment horizon Dine Brands Global is expected to under-perform the Gap,. But the stock apears to be less risky and, when comparing its historical volatility, Dine Brands Global is 1.36 times less risky than Gap,. The stock trades about -0.09 of its potential returns per unit of risk. The The Gap, is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,190 in The Gap, on September 13, 2024 and sell it today you would earn a total of 228.00 from holding The Gap, or generate 10.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dine Brands Global vs. The Gap,
Performance |
| Timeline |
| Dine Brands Global |
| Gap, |
Dine Brands and Gap, Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dine Brands and Gap,
The main advantage of trading using opposite Dine Brands and Gap, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dine Brands position performs unexpectedly, Gap, 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 Gap, will offset losses from the drop in Gap,'s long position.The idea behind Dine Brands Global and The Gap, 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.| Gap, vs. Mesa Air Group | Gap, vs. Southwest Airlines | Gap, vs. Brenmiller Energy Ltd | Gap, vs. Delta Air Lines |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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