Correlation Between Dave Busters and Cebu Air
Can any of the company-specific risk be diversified away by investing in both Dave Busters and Cebu Air 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 Dave Busters and Cebu Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dave Busters Entertainment and Cebu Air ADR, you can compare the effects of market volatilities on Dave Busters and Cebu Air 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 Dave Busters with a short position of Cebu Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dave Busters and Cebu Air.
Diversification Opportunities for Dave Busters and Cebu Air
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dave and Cebu is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and Cebu Air ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cebu Air ADR and Dave Busters 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 Dave Busters Entertainment are associated (or correlated) with Cebu Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cebu Air ADR has no effect on the direction of Dave Busters i.e., Dave Busters and Cebu Air go up and down completely randomly.
Pair Corralation between Dave Busters and Cebu Air
Given the investment horizon of 90 days Dave Busters Entertainment is expected to generate 0.9 times more return on investment than Cebu Air. However, Dave Busters Entertainment is 1.11 times less risky than Cebu Air. It trades about 0.02 of its potential returns per unit of risk. Cebu Air ADR is currently generating about -0.02 per unit of risk. If you would invest 3,469 in Dave Busters Entertainment on August 30, 2024 and sell it today you would earn a total of 293.00 from holding Dave Busters Entertainment or generate 8.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dave Busters Entertainment vs. Cebu Air ADR
Performance |
| Timeline |
| Dave Busters Enterta |
| Cebu Air ADR |
Dave Busters and Cebu Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dave Busters and Cebu Air
The main advantage of trading using opposite Dave Busters and Cebu Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dave Busters position performs unexpectedly, Cebu Air 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 Cebu Air will offset losses from the drop in Cebu Air's long position.| Dave Busters vs. Chipotle Mexican Grill | Dave Busters vs. Yum Brands | Dave Busters vs. The Wendys Co | Dave Busters vs. McDonalds |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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