Correlation Between FAT Brands and Dine Brands
Can any of the company-specific risk be diversified away by investing in both FAT Brands and Dine Brands 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 FAT Brands and Dine Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FAT Brands and Dine Brands Global, you can compare the effects of market volatilities on FAT Brands and Dine Brands 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 FAT Brands with a short position of Dine Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAT Brands and Dine Brands.
Diversification Opportunities for FAT Brands and Dine Brands
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FAT and Dine is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding FAT Brands and Dine Brands Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dine Brands Global and FAT 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 FAT Brands are associated (or correlated) with Dine Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dine Brands Global has no effect on the direction of FAT Brands i.e., FAT Brands and Dine Brands go up and down completely randomly.
Pair Corralation between FAT Brands and Dine Brands
Assuming the 90 days horizon FAT Brands is expected to generate 1.94 times less return on investment than Dine Brands. But when comparing it to its historical volatility, FAT Brands is 1.27 times less risky than Dine Brands. It trades about 0.08 of its potential returns per unit of risk. Dine Brands Global is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,995 in Dine Brands Global on August 26, 2024 and sell it today you would earn a total of 301.00 from holding Dine Brands Global or generate 10.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAT Brands vs. Dine Brands Global
Performance |
| Timeline |
| FAT Brands |
| Dine Brands Global |
FAT Brands and Dine Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAT Brands and Dine Brands
The main advantage of trading using opposite FAT Brands and Dine Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAT Brands position performs unexpectedly, Dine Brands 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 Dine Brands will offset losses from the drop in Dine Brands' long position.| FAT Brands vs. FAT Brands | FAT Brands vs. Brinker International | FAT Brands vs. Jack In The | FAT Brands vs. Potbelly Co |
| 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |