Correlation Between Dave Busters and Tarena International
Can any of the company-specific risk be diversified away by investing in both Dave Busters and Tarena International 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 Tarena International 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 Tarena International, you can compare the effects of market volatilities on Dave Busters and Tarena International 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 Tarena International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dave Busters and Tarena International.
Diversification Opportunities for Dave Busters and Tarena International
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dave and Tarena is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and Tarena International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tarena International 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 Tarena International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tarena International has no effect on the direction of Dave Busters i.e., Dave Busters and Tarena International go up and down completely randomly.
Pair Corralation between Dave Busters and Tarena International
Given the investment horizon of 90 days Dave Busters Entertainment is expected to generate 0.78 times more return on investment than Tarena International. However, Dave Busters Entertainment is 1.29 times less risky than Tarena International. It trades about -0.02 of its potential returns per unit of risk. Tarena International is currently generating about -0.24 per unit of risk. If you would invest 3,870 in Dave Busters Entertainment on August 31, 2024 and sell it today you would lose (108.00) from holding Dave Busters Entertainment or give up 2.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dave Busters Entertainment vs. Tarena International
Performance |
| Timeline |
| Dave Busters Enterta |
| Tarena International |
Dave Busters and Tarena International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dave Busters and Tarena International
The main advantage of trading using opposite Dave Busters and Tarena International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dave Busters position performs unexpectedly, Tarena International 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 Tarena International will offset losses from the drop in Tarena International's long position.| Dave Busters vs. Imax Corp | Dave Busters vs. Marcus | Dave Busters vs. AMC Networks | Dave Busters vs. Cinemark Holdings |
| Tarena International vs. Dave Busters Entertainment | Tarena International vs. Hertz Global Holdings | Tarena International vs. National CineMedia | Tarena International vs. Herc Holdings |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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