Correlation Between Dine Brands and FactSet Research

Can any of the company-specific risk be diversified away by investing in both Dine Brands and FactSet Research 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 FactSet Research 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 FactSet Research Systems, you can compare the effects of market volatilities on Dine Brands and FactSet Research 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 FactSet Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dine Brands and FactSet Research.

Diversification Opportunities for Dine Brands and FactSet Research

0.64

Correlation Coefficient

Dine Brands  FactSet Research

Poor diversification

The 3 months correlation between Dine and FactSet is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dine Brands Global and FactSet Research Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FactSet Research Systems 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 FactSet Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FactSet Research Systems has no effect on the direction of Dine Brands i.e., Dine Brands and FactSet Research go up and down completely randomly.

Pair Corralation between Dine Brands and FactSet Research

Considering the 90-day investment horizon Dine Brands Global is expected to under-perform the FactSet Research. In addition to that, Dine Brands is 2.63 times more volatile than FactSet Research Systems. It trades about -0.27 of its total potential returns per unit of risk. FactSet Research Systems is currently generating about -0.39 per unit of volatility. If you would invest  48,934  in FactSet Research Systems on October 23, 2024 and sell it today you would lose (2,635) from holding FactSet Research Systems or give up 5.38% of portfolio value over 90 days.

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

Dine Brands Global  vs.  FactSet Research Systems

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.

FactSet Research Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FactSet Research Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, FactSet Research is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Dine Brands and FactSet Research

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

The idea behind Dine Brands Global and FactSet Research Systems 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.