Correlation Between Bagger Daves and Dennys Corp

Can any of the company-specific risk be diversified away by investing in both Bagger Daves 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 Bagger Daves and Dennys Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bagger Daves Burger and Dennys Corp, you can compare the effects of market volatilities on Bagger Daves 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 Bagger Daves with a short position of Dennys Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bagger Daves and Dennys Corp.

Diversification Opportunities for Bagger Daves and Dennys Corp

0.22

Correlation Coefficient

Bagger Daves  Dennys Corp

Modest diversification

The 3 months correlation between Bagger and Dennys is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Bagger Daves Burger and Dennys Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dennys Corp and Bagger Daves 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 Bagger Daves Burger 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 Bagger Daves i.e., Bagger Daves and Dennys Corp go up and down completely randomly.

Pair Corralation between Bagger Daves and Dennys Corp

Given the investment horizon of 90 days Bagger Daves is expected to generate 1.24 times less return on investment than Dennys Corp. In addition to that, Bagger Daves is 2.32 times more volatile than Dennys Corp. It trades about 0.04 of its total potential returns per unit of risk. Dennys Corp is currently generating about 0.12 per unit of volatility. If you would invest  607.00  in Dennys Corp on October 8, 2024 and sell it today you would earn a total of  34.00  from holding Dennys Corp or generate 5.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Bagger Daves Burger  vs.  Dennys Corp

Bagger Daves Burger

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bagger Daves Burger has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Dennys Corp

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dennys Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Dennys Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bagger Daves and Dennys Corp

The main advantage of trading using opposite Bagger Daves and Dennys Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bagger Daves 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.

The idea behind Bagger Daves Burger and Dennys Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.