Correlation Between Dine Brands and Sligro Food

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

Diversification Opportunities for Dine Brands and Sligro Food

-0.12

Correlation Coefficient

Dine Brands  Sligro Food

Good diversification

The 3 months correlation between Dine and Sligro is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Dine Brands Global and Sligro Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sligro Food Group 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 Sligro Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sligro Food Group has no effect on the direction of Dine Brands i.e., Dine Brands and Sligro Food go up and down completely randomly.

Pair Corralation between Dine Brands and Sligro Food

Considering the 90-day investment horizon Dine Brands Global is expected to under-perform the Sligro Food. In addition to that, Dine Brands is 1.65 times more volatile than Sligro Food Group. It trades about -0.05 of its total potential returns per unit of risk. Sligro Food Group is currently generating about -0.07 per unit of volatility. If you would invest  1,705  in Sligro Food Group on October 3, 2024 and sell it today you would lose (505.00) from holding Sligro Food Group or give up 29.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.26%
Values	Daily Returns

Dine Brands Global  vs.  Sligro Food Group

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 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.

Sligro Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sligro Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Dine Brands and Sligro Food

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

The idea behind Dine Brands Global and Sligro Food Group 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 Commodity Directory module to find actively traded commodities issued by global exchanges.