Correlation Between Dine Brands and Holley
Can any of the company-specific risk be diversified away by investing in both Dine Brands and Holley 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 Holley 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 Holley Inc, you can compare the effects of market volatilities on Dine Brands and Holley 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 Holley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dine Brands and Holley.
Diversification Opportunities for Dine Brands and Holley
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dine and Holley is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dine Brands Global and Holley Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holley Inc 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 Holley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holley Inc has no effect on the direction of Dine Brands i.e., Dine Brands and Holley go up and down completely randomly.
Pair Corralation between Dine Brands and Holley
Considering the 90-day investment horizon Dine Brands Global is expected to generate 1.58 times more return on investment than Holley. However, Dine Brands is 1.58 times more volatile than Holley Inc. It trades about 0.16 of its potential returns per unit of risk. Holley Inc is currently generating about 0.08 per unit of risk. If you would invest 3,077 in Dine Brands Global on August 30, 2024 and sell it today you would earn a total of 430.00 from holding Dine Brands Global or generate 13.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dine Brands Global vs. Holley Inc
Performance |
| Timeline |
| Dine Brands Global |
| Holley Inc |
Dine Brands and Holley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dine Brands and Holley
The main advantage of trading using opposite Dine Brands and Holley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dine Brands position performs unexpectedly, Holley 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 Holley will offset losses from the drop in Holley's long position.| Dine Brands vs. Chipotle Mexican Grill | Dine Brands vs. Yum Brands | Dine Brands vs. The Wendys Co | Dine Brands vs. McDonalds |
| Holley vs. Dorman Products | Holley vs. Monro Muffler Brake | Holley vs. Standard Motor Products | Holley vs. Stoneridge |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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