Correlation Between Definitive Healthcare and Dine Brands

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

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

Diversification Opportunities for Definitive Healthcare and Dine Brands

0.64

Correlation Coefficient

Definitive Healthcare  Dine Brands

Poor diversification

The 3 months correlation between Definitive and Dine is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Definitive Healthcare Corp 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 Definitive Healthcare 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 Definitive Healthcare Corp 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 Definitive Healthcare i.e., Definitive Healthcare and Dine Brands go up and down completely randomly.

Pair Corralation between Definitive Healthcare and Dine Brands

Allowing for the 90-day total investment horizon Definitive Healthcare Corp is expected to generate 1.31 times more return on investment than Dine Brands. However, Definitive Healthcare is 1.31 times more volatile than Dine Brands Global. It trades about -0.1 of its potential returns per unit of risk. Dine Brands Global is currently generating about -0.27 per unit of risk. If you would invest  416.00  in Definitive Healthcare Corp on October 23, 2024 and sell it today you would lose (22.00) from holding Definitive Healthcare Corp or give up 5.29% of portfolio value over 90 days.

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

Definitive Healthcare Corp  vs.  Dine Brands Global

Definitive Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Definitive Healthcare Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Dine Brands Global

Risk-Adjusted Performance

0 of 100

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 latest fragile performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Definitive Healthcare and Dine Brands

The main advantage of trading using opposite Definitive Healthcare and Dine Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Definitive Healthcare 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 Definitive Healthcare Corp 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 Transaction History module to view history of all your transactions and understand their impact on performance.