Correlation Between Dennys Corp and Universal Technical

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

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

Diversification Opportunities for Dennys Corp and Universal Technical

0.01

Correlation Coefficient

Dennys Corp  Universal Technical

Significant diversification

The 3 months correlation between Dennys and Universal is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Dennys Corp and Universal Technical Institute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Technical 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 Universal Technical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Technical has no effect on the direction of Dennys Corp i.e., Dennys Corp and Universal Technical go up and down completely randomly.

Pair Corralation between Dennys Corp and Universal Technical

Given the investment horizon of 90 days Dennys Corp is expected to under-perform the Universal Technical. In addition to that, Dennys Corp is 1.59 times more volatile than Universal Technical Institute. It trades about -0.12 of its total potential returns per unit of risk. Universal Technical Institute is currently generating about 0.04 per unit of volatility. If you would invest  2,544  in Universal Technical Institute on December 22, 2024 and sell it today you would earn a total of  103.00  from holding Universal Technical Institute or generate 4.05% 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.  Universal Technical Institute

Dennys Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dennys Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic 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.

Universal Technical

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Technical Institute are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Universal Technical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Dennys Corp and Universal Technical

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

The idea behind Dennys Corp and Universal Technical Institute 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 Global Correlations module to find global opportunities by holding instruments from different markets.