Correlation Between Dine Brands and Distoken Acquisition

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

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

Diversification Opportunities for Dine Brands and Distoken Acquisition

0.48

Correlation Coefficient

Dine Brands  Distoken Acquisition

Very weak diversification

The 3 months correlation between Dine and Distoken is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Dine Brands Global and Distoken Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Distoken Acquisition and Dine Brands 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 Dine Brands Global are associated (or correlated) with Distoken Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Distoken Acquisition has no effect on the direction of Dine Brands i.e., Dine Brands and Distoken Acquisition go up and down completely randomly.

Pair Corralation between Dine Brands and Distoken Acquisition

Considering the 90-day investment horizon Dine Brands Global is expected to generate 8.43 times more return on investment than Distoken Acquisition. However, Dine Brands is 8.43 times more volatile than Distoken Acquisition. It trades about 0.02 of its potential returns per unit of risk. Distoken Acquisition is currently generating about 0.12 per unit of risk. If you would invest  2,968  in Dine Brands Global on September 21, 2024 and sell it today you would earn a total of  42.00  from holding Dine Brands Global or generate 1.42% return on investment over 90 days.

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

Dine Brands Global  vs.  Distoken Acquisition

Dine Brands Global

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dine Brands Global are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Dine Brands is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Distoken Acquisition

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Distoken Acquisition are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Distoken Acquisition is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Dine Brands and Distoken Acquisition

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

The idea behind Dine Brands Global and Distoken Acquisition 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.