Correlation Between Dennys Corp and Cars
Can any of the company-specific risk be diversified away by investing in both Dennys Corp and Cars 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 Dennys Corp and Cars into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dennys Corp and Cars Inc, you can compare the effects of market volatilities on Dennys Corp and Cars 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 Dennys Corp with a short position of Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dennys Corp and Cars.
Diversification Opportunities for Dennys Corp and Cars
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dennys and Cars is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Dennys Corp and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc and Dennys Corp 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 Dennys Corp are associated (or correlated) with Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of Dennys Corp i.e., Dennys Corp and Cars go up and down completely randomly.
Pair Corralation between Dennys Corp and Cars
Given the investment horizon of 90 days Dennys Corp is expected to generate 1.75 times more return on investment than Cars. However, Dennys Corp is 1.75 times more volatile than Cars Inc. It trades about 0.01 of its potential returns per unit of risk. Cars Inc is currently generating about 0.01 per unit of risk. If you would invest 615.00 in Dennys Corp on October 3, 2024 and sell it today you would lose (10.00) from holding Dennys Corp or give up 1.63% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Dennys Corp vs. Cars Inc
Performance |
Timeline |
Dennys Corp |
Cars Inc |
Dennys Corp and Cars Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dennys Corp and Cars
The main advantage of trading using opposite Dennys Corp and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dennys Corp position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.Dennys Corp vs. Brinker International | Dennys Corp vs. Bloomin Brands | Dennys Corp vs. Jack In The | Dennys Corp vs. BJs Restaurants |
Cars vs. Group 1 Automotive | Cars vs. KAR Auction Services | Cars vs. CarMax Inc | Cars vs. Rush Enterprises A |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |