Correlation Between Dine Brands and Guardian Pharmacy

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

Diversification Opportunities for Dine Brands and Guardian Pharmacy

0.08

Correlation Coefficient

Dine Brands  Guardian Pharmacy

Significant diversification

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

Pair Corralation between Dine Brands and Guardian Pharmacy

Considering the 90-day investment horizon Dine Brands is expected to generate 6.11 times less return on investment than Guardian Pharmacy. In addition to that, Dine Brands is 1.0 times more volatile than Guardian Pharmacy Services,. It trades about 0.04 of its total potential returns per unit of risk. Guardian Pharmacy Services, is currently generating about 0.25 per unit of volatility. If you would invest  1,600  in Guardian Pharmacy Services, on September 13, 2024 and sell it today you would earn a total of  917.00  from holding Guardian Pharmacy Services, or generate 57.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.94%
Values	Daily Returns

Dine Brands Global  vs.  Guardian Pharmacy Services,

Dine Brands Global

Risk-Adjusted Performance

3 of 100

Insignificant

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

Guardian Pharmacy

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian Pharmacy Services, are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Guardian Pharmacy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dine Brands and Guardian Pharmacy

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

The idea behind Dine Brands Global and Guardian Pharmacy Services, 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.

Check out your portfolio center.

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.