Correlation Between Dine Brands and NETGEAR
Can any of the company-specific risk be diversified away by investing in both Dine Brands and NETGEAR 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 NETGEAR 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 NETGEAR, you can compare the effects of market volatilities on Dine Brands and NETGEAR 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 NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dine Brands and NETGEAR.
Diversification Opportunities for Dine Brands and NETGEAR
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dine and NETGEAR is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Dine Brands Global and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR 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 NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of Dine Brands i.e., Dine Brands and NETGEAR go up and down completely randomly.
Pair Corralation between Dine Brands and NETGEAR
Considering the 90-day investment horizon Dine Brands Global is expected to generate 2.37 times more return on investment than NETGEAR. However, Dine Brands is 2.37 times more volatile than NETGEAR. It trades about 0.19 of its potential returns per unit of risk. NETGEAR is currently generating about 0.21 per unit of risk. If you would invest 3,066 in Dine Brands Global on September 2, 2024 and sell it today you would earn a total of 526.00 from holding Dine Brands Global or generate 17.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dine Brands Global vs. NETGEAR
Performance |
| Timeline |
| Dine Brands Global |
| NETGEAR |
Dine Brands and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dine Brands and NETGEAR
The main advantage of trading using opposite Dine Brands and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dine Brands position performs unexpectedly, NETGEAR 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 NETGEAR will offset losses from the drop in NETGEAR's long position.| Dine Brands vs. Bloomin Brands | Dine Brands vs. BJs Restaurants | Dine Brands vs. The Cheesecake Factory | Dine Brands vs. Brinker International |
| NETGEAR vs. Comtech Telecommunications Corp | NETGEAR vs. KVH Industries | NETGEAR vs. Silicom | NETGEAR vs. Knowles Cor |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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