Correlation Between Dine Brands and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Dine Brands and Merit Medical 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 Merit Medical 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 Merit Medical Systems, you can compare the effects of market volatilities on Dine Brands and Merit Medical 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 Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dine Brands and Merit Medical.
Diversification Opportunities for Dine Brands and Merit Medical
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dine and Merit is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dine Brands Global and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical 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 Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of Dine Brands i.e., Dine Brands and Merit Medical go up and down completely randomly.
Pair Corralation between Dine Brands and Merit Medical
Considering the 90-day investment horizon Dine Brands Global is expected to under-perform the Merit Medical. In addition to that, Dine Brands is 1.52 times more volatile than Merit Medical Systems. It trades about -0.04 of its total potential returns per unit of risk. Merit Medical Systems is currently generating about 0.05 per unit of volatility. If you would invest 6,960 in Merit Medical Systems on September 23, 2024 and sell it today you would earn a total of 2,862 from holding Merit Medical Systems or generate 41.12% 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. Merit Medical Systems
Performance |
Timeline |
Dine Brands Global |
Merit Medical Systems |
Dine Brands and Merit Medical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dine Brands and Merit Medical
The main advantage of trading using opposite Dine Brands and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dine Brands position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical's long position.Dine Brands vs. Bloomin Brands | Dine Brands vs. BJs Restaurants | Dine Brands vs. The Cheesecake Factory | Dine Brands vs. Brinker International |
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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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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