Correlation Between Dennys Corp and Repligen

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

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

Diversification Opportunities for Dennys Corp and Repligen

0.08

Correlation Coefficient

Dennys Corp  Repligen

Significant diversification

The 3 months correlation between Dennys and Repligen is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Dennys Corp and Repligen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repligen 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 Repligen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repligen has no effect on the direction of Dennys Corp i.e., Dennys Corp and Repligen go up and down completely randomly.

Pair Corralation between Dennys Corp and Repligen

Given the investment horizon of 90 days Dennys Corp is expected to generate 1.26 times more return on investment than Repligen. However, Dennys Corp is 1.26 times more volatile than Repligen. It trades about 0.05 of its potential returns per unit of risk. Repligen is currently generating about 0.05 per unit of risk. If you would invest  586.00  in Dennys Corp on September 12, 2024 and sell it today you would earn a total of  51.00  from holding Dennys Corp or generate 8.7% 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.  Repligen

Dennys Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dennys Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Dennys Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Repligen

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Dennys Corp and Repligen

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

The idea behind Dennys Corp and Repligen 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..