Correlation Between Red Robin and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Red Robin and Dow Jones 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 Red Robin and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Robin Gourmet and Dow Jones Industrial, you can compare the effects of market volatilities on Red Robin and Dow Jones 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 Red Robin with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Robin and Dow Jones.
Diversification Opportunities for Red Robin and Dow Jones
Poor diversification
The 3 months correlation between Red and Dow is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Red Robin Gourmet and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Red Robin 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 Red Robin Gourmet are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Red Robin i.e., Red Robin and Dow Jones go up and down completely randomly.
Pair Corralation between Red Robin and Dow Jones
Given the investment horizon of 90 days Red Robin Gourmet is expected to under-perform the Dow Jones. In addition to that, Red Robin is 4.71 times more volatile than Dow Jones Industrial. It trades about -0.14 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 per unit of volatility. If you would invest 4,238,757 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 247,274 from holding Dow Jones Industrial or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Robin Gourmet vs. Dow Jones Industrial
Performance |
| Timeline |
Red Robin and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Red Robin Gourmet
Pair trading matchups for Red Robin
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Red Robin and Dow Jones
The main advantage of trading using opposite Red Robin and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Robin position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Red Robin vs. Dine Brands Global | Red Robin vs. Bloomin Brands | Red Robin vs. BJs Restaurants | Red Robin vs. The Cheesecake Factory |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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