Correlation Between Dennys Corp and Killbuck Bancshares

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

By analyzing existing cross correlation between Dennys Corp and Killbuck Bancshares, you can compare the effects of market volatilities on Dennys Corp and Killbuck Bancshares 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 Killbuck Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dennys Corp and Killbuck Bancshares.

Diversification Opportunities for Dennys Corp and Killbuck Bancshares

0.06

Correlation Coefficient

Dennys Corp  Killbuck Bancshares

Significant diversification

The 3 months correlation between Dennys and Killbuck is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Dennys Corp and Killbuck Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Killbuck Bancshares 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 Killbuck Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Killbuck Bancshares has no effect on the direction of Dennys Corp i.e., Dennys Corp and Killbuck Bancshares go up and down completely randomly.

Pair Corralation between Dennys Corp and Killbuck Bancshares

Given the investment horizon of 90 days Dennys Corp is expected to under-perform the Killbuck Bancshares. In addition to that, Dennys Corp is 1.45 times more volatile than Killbuck Bancshares. It trades about -0.07 of its total potential returns per unit of risk. Killbuck Bancshares is currently generating about 0.02 per unit of volatility. If you would invest  10,736  in Killbuck Bancshares on October 6, 2024 and sell it today you would earn a total of  64.00  from holding Killbuck Bancshares or generate 0.6% return on investment over 90 days.

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

Dennys Corp  vs.  Killbuck Bancshares

Dennys Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dennys Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Dennys Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Killbuck Bancshares

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Killbuck Bancshares are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Killbuck Bancshares is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dennys Corp and Killbuck Bancshares

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

The idea behind Dennys Corp and Killbuck Bancshares 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.