Correlation Between Herc Holdings and Dennys Corp
Can any of the company-specific risk be diversified away by investing in both Herc Holdings and Dennys Corp 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 Herc Holdings and Dennys Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herc Holdings and Dennys Corp, you can compare the effects of market volatilities on Herc Holdings and Dennys Corp 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 Herc Holdings with a short position of Dennys Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herc Holdings and Dennys Corp.
Diversification Opportunities for Herc Holdings and Dennys Corp
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Herc and Dennys is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Herc Holdings and Dennys Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dennys Corp and Herc Holdings 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 Herc Holdings are associated (or correlated) with Dennys Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dennys Corp has no effect on the direction of Herc Holdings i.e., Herc Holdings and Dennys Corp go up and down completely randomly.
Pair Corralation between Herc Holdings and Dennys Corp
Considering the 90-day investment horizon Herc Holdings is expected to generate 0.91 times more return on investment than Dennys Corp. However, Herc Holdings is 1.1 times less risky than Dennys Corp. It trades about 0.15 of its potential returns per unit of risk. Dennys Corp is currently generating about -0.04 per unit of risk. If you would invest 21,035 in Herc Holdings on August 31, 2024 and sell it today you would earn a total of 1,940 from holding Herc Holdings or generate 9.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herc Holdings vs. Dennys Corp
Performance |
| Timeline |
| Herc Holdings |
| Dennys Corp |
Herc Holdings and Dennys Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herc Holdings and Dennys Corp
The main advantage of trading using opposite Herc Holdings and Dennys Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herc Holdings position performs unexpectedly, Dennys Corp 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 Dennys Corp will offset losses from the drop in Dennys Corp's long position.| Herc Holdings vs. McGrath RentCorp | Herc Holdings vs. Alta Equipment Group | Herc Holdings vs. Custom Truck One | Herc Holdings vs. GATX Corporation |
| Dennys Corp vs. Brinker International | Dennys Corp vs. Bloomin Brands | Dennys Corp vs. Jack In The | Dennys Corp vs. BJs Restaurants |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |