Correlation Between Dine Brands and Loandepot

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

Diversification Opportunities for Dine Brands and Loandepot

0.18

Correlation Coefficient

Dine Brands  Loandepot

Average diversification

The 3 months correlation between Dine and Loandepot is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Dine Brands Global and Loandepot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loandepot 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 Loandepot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loandepot has no effect on the direction of Dine Brands i.e., Dine Brands and Loandepot go up and down completely randomly.

Pair Corralation between Dine Brands and Loandepot

Considering the 90-day investment horizon Dine Brands Global is expected to under-perform the Loandepot. But the stock apears to be less risky and, when comparing its historical volatility, Dine Brands Global is 1.81 times less risky than Loandepot. The stock trades about -0.03 of its potential returns per unit of risk. The Loandepot is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  177.00  in Loandepot on September 21, 2024 and sell it today you would earn a total of  20.00  from holding Loandepot or generate 11.3% return on investment over 90 days.

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

Dine Brands Global  vs.  Loandepot

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.

Loandepot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Loandepot has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Dine Brands and Loandepot

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

The idea behind Dine Brands Global and Loandepot 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .