Correlation Between El Pollo and Dennys Corp
Can any of the company-specific risk be diversified away by investing in both El Pollo 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 El Pollo and Dennys Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between El Pollo Loco and Dennys Corp, you can compare the effects of market volatilities on El Pollo 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 El Pollo with a short position of Dennys Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Pollo and Dennys Corp.
Diversification Opportunities for El Pollo and Dennys Corp
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between LOCO and Dennys is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding El Pollo Loco and Dennys Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dennys Corp and El Pollo 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 El Pollo Loco 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 El Pollo i.e., El Pollo and Dennys Corp go up and down completely randomly.
Pair Corralation between El Pollo and Dennys Corp
Given the investment horizon of 90 days El Pollo Loco is expected to generate 0.46 times more return on investment than Dennys Corp. However, El Pollo Loco is 2.15 times less risky than Dennys Corp. It trades about 0.08 of its potential returns per unit of risk. Dennys Corp is currently generating about 0.0 per unit of risk. If you would invest 1,046 in El Pollo Loco on August 24, 2024 and sell it today you would earn a total of 163.00 from holding El Pollo Loco or generate 15.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
El Pollo Loco vs. Dennys Corp
Performance |
| Timeline |
| El Pollo Loco |
| Dennys Corp |
El Pollo and Dennys Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with El Pollo and Dennys Corp
The main advantage of trading using opposite El Pollo and Dennys Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Pollo 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.| El Pollo vs. FAT Brands | El Pollo vs. Potbelly Co | El Pollo vs. BJs Restaurants | El Pollo vs. One Group Hospitality |
| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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