Correlation Between Dine Brands and Noodles
Can any of the company-specific risk be diversified away by investing in both Dine Brands and Noodles 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 Noodles 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 Noodles Company, you can compare the effects of market volatilities on Dine Brands and Noodles 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 Noodles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dine Brands and Noodles.
Diversification Opportunities for Dine Brands and Noodles
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dine and Noodles is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Dine Brands Global and Noodles Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noodles Company 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 Noodles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noodles Company has no effect on the direction of Dine Brands i.e., Dine Brands and Noodles go up and down completely randomly.
Pair Corralation between Dine Brands and Noodles
Considering the 90-day investment horizon Dine Brands Global is expected to generate 0.8 times more return on investment than Noodles. However, Dine Brands Global is 1.25 times less risky than Noodles. It trades about 0.14 of its potential returns per unit of risk. Noodles Company is currently generating about -0.47 per unit of risk. If you would invest 3,118 in Dine Brands Global on August 27, 2024 and sell it today you would earn a total of 360.00 from holding Dine Brands Global or generate 11.55% 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. Noodles Company
Performance |
| Timeline |
| Dine Brands Global |
| Noodles Company |
Dine Brands and Noodles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dine Brands and Noodles
The main advantage of trading using opposite Dine Brands and Noodles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dine Brands position performs unexpectedly, Noodles 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 Noodles will offset losses from the drop in Noodles' 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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