Correlation Between BrightSpring Health and Dine Brands

Can any of the company-specific risk be diversified away by investing in both BrightSpring Health and Dine Brands 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 BrightSpring Health and Dine Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BrightSpring Health Services, and Dine Brands Global, you can compare the effects of market volatilities on BrightSpring Health and Dine Brands 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 BrightSpring Health with a short position of Dine Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of BrightSpring Health and Dine Brands.

Diversification Opportunities for BrightSpring Health and Dine Brands

0.43

Correlation Coefficient

BrightSpring Health  Dine Brands

Very weak diversification

The 3 months correlation between BrightSpring and Dine is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding BrightSpring Health Services, and Dine Brands Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dine Brands Global and BrightSpring Health 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 BrightSpring Health Services, are associated (or correlated) with Dine Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dine Brands Global has no effect on the direction of BrightSpring Health i.e., BrightSpring Health and Dine Brands go up and down completely randomly.

Pair Corralation between BrightSpring Health and Dine Brands

Assuming the 90 days horizon BrightSpring Health Services, is expected to generate 0.9 times more return on investment than Dine Brands. However, BrightSpring Health Services, is 1.12 times less risky than Dine Brands. It trades about 0.05 of its potential returns per unit of risk. Dine Brands Global is currently generating about -0.11 per unit of risk. If you would invest  6,195  in BrightSpring Health Services, on December 30, 2024 and sell it today you would earn a total of  358.00  from holding BrightSpring Health Services, or generate 5.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

BrightSpring Health Services,  vs.  Dine Brands Global

BrightSpring Health

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BrightSpring Health Services, are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, BrightSpring Health may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Dine Brands Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dine Brands Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with BrightSpring Health and Dine Brands

The main advantage of trading using opposite BrightSpring Health and Dine Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BrightSpring Health position performs unexpectedly, Dine Brands 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 Dine Brands will offset losses from the drop in Dine Brands' long position.

The idea behind BrightSpring Health Services, and Dine Brands Global 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.