Correlation Between Dine Brands and Ruths Hospitality
Can any of the company-specific risk be diversified away by investing in both Dine Brands and Ruths Hospitality 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 Ruths Hospitality 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 Ruths Hospitality Group, you can compare the effects of market volatilities on Dine Brands and Ruths Hospitality 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 Ruths Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dine Brands and Ruths Hospitality.
Diversification Opportunities for Dine Brands and Ruths Hospitality
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dine and Ruths is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Dine Brands Global and Ruths Hospitality Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruths Hospitality 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 Ruths Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ruths Hospitality has no effect on the direction of Dine Brands i.e., Dine Brands and Ruths Hospitality go up and down completely randomly.
Pair Corralation between Dine Brands and Ruths Hospitality
Considering the 90-day investment horizon Dine Brands Global is expected to under-perform the Ruths Hospitality. But the stock apears to be less risky and, when comparing its historical volatility, Dine Brands Global is 1.56 times less risky than Ruths Hospitality. The stock trades about -0.06 of its potential returns per unit of risk. The Ruths Hospitality Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,727 in Ruths Hospitality Group on August 27, 2024 and sell it today you would earn a total of 422.00 from holding Ruths Hospitality Group or generate 24.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 20.22% |
| Values | Daily Returns |
Dine Brands Global vs. Ruths Hospitality Group
Performance |
| Timeline |
| Dine Brands Global |
| Ruths Hospitality |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Dine Brands and Ruths Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dine Brands and Ruths Hospitality
The main advantage of trading using opposite Dine Brands and Ruths Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dine Brands position performs unexpectedly, Ruths Hospitality 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 Ruths Hospitality will offset losses from the drop in Ruths Hospitality's long position.| Dine Brands vs. Bloomin Brands | Dine Brands vs. BJs Restaurants | Dine Brands vs. The Cheesecake Factory | Dine Brands vs. Brinker International |
| Ruths Hospitality vs. Dine Brands Global | Ruths Hospitality vs. Bloomin Brands | Ruths Hospitality vs. BJs Restaurants | Ruths Hospitality vs. The Cheesecake Factory |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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