Correlation Between Dine Brands and Stoneridge
Can any of the company-specific risk be diversified away by investing in both Dine Brands and Stoneridge 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 Stoneridge 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 Stoneridge, you can compare the effects of market volatilities on Dine Brands and Stoneridge 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 Stoneridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dine Brands and Stoneridge.
Diversification Opportunities for Dine Brands and Stoneridge
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dine and Stoneridge is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Dine Brands Global and Stoneridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stoneridge 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 Stoneridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stoneridge has no effect on the direction of Dine Brands i.e., Dine Brands and Stoneridge go up and down completely randomly.
Pair Corralation between Dine Brands and Stoneridge
Considering the 90-day investment horizon Dine Brands Global is expected to generate 0.63 times more return on investment than Stoneridge. However, Dine Brands Global is 1.59 times less risky than Stoneridge. It trades about -0.03 of its potential returns per unit of risk. Stoneridge is currently generating about -0.29 per unit of risk. If you would invest 2,664 in Dine Brands Global on November 18, 2024 and sell it today you would lose (67.00) from holding Dine Brands Global or give up 2.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dine Brands Global vs. Stoneridge
Performance |
| Timeline |
| Dine Brands Global |
| Stoneridge |
Dine Brands and Stoneridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dine Brands and Stoneridge
The main advantage of trading using opposite Dine Brands and Stoneridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dine Brands position performs unexpectedly, Stoneridge 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 Stoneridge will offset losses from the drop in Stoneridge's long position.| Dine Brands vs. Bloomin Brands | Dine Brands vs. BJs Restaurants | Dine Brands vs. The Cheesecake Factory | Dine Brands vs. Brinker International |
| Stoneridge vs. Monro Muffler Brake | Stoneridge vs. Motorcar Parts of | Stoneridge vs. Standard Motor Products | Stoneridge vs. Douglas Dynamics |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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