Correlation Between Dine Brands and 11041RAL2

Can any of the company-specific risk be diversified away by investing in both Dine Brands and 11041RAL2 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 11041RAL2 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 BALN 75 01 JUL 27, you can compare the effects of market volatilities on Dine Brands and 11041RAL2 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 11041RAL2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dine Brands and 11041RAL2.

Diversification Opportunities for Dine Brands and 11041RAL2

0.58

Correlation Coefficient

Dine Brands  11041RAL2

Very weak diversification

The 3 months correlation between Dine and 11041RAL2 is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Dine Brands Global and BALN 75 01 JUL 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BALN 75 01 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 11041RAL2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BALN 75 01 has no effect on the direction of Dine Brands i.e., Dine Brands and 11041RAL2 go up and down completely randomly.

Pair Corralation between Dine Brands and 11041RAL2

Considering the 90-day investment horizon Dine Brands Global is expected to under-perform the 11041RAL2. In addition to that, Dine Brands is 3.67 times more volatile than BALN 75 01 JUL 27. It trades about -0.07 of its total potential returns per unit of risk. BALN 75 01 JUL 27 is currently generating about -0.04 per unit of volatility. If you would invest  11,010  in BALN 75 01 JUL 27 on October 12, 2024 and sell it today you would lose (428.00) from holding BALN 75 01 JUL 27 or give up 3.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	30.51%
Values	Daily Returns

Dine Brands Global  vs.  BALN 75 01 JUL 27

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 unfluctuating 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.

BALN 75 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BALN 75 01 JUL 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 11041RAL2 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dine Brands and 11041RAL2

The main advantage of trading using opposite Dine Brands and 11041RAL2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dine Brands position performs unexpectedly, 11041RAL2 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 11041RAL2 will offset losses from the drop in 11041RAL2's long position.

The idea behind Dine Brands Global and BALN 75 01 JUL 27 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.