Correlation Between Eureka Acquisition and Dine Brands

Can any of the company-specific risk be diversified away by investing in both Eureka Acquisition and Dine Brands 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 Eureka Acquisition and Dine Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eureka Acquisition Corp and Dine Brands Global, you can compare the effects of market volatilities on Eureka Acquisition and Dine Brands 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 Eureka Acquisition with a short position of Dine Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eureka Acquisition and Dine Brands.

Diversification Opportunities for Eureka Acquisition and Dine Brands

-0.03

Correlation Coefficient

Eureka Acquisition  Dine Brands

Good diversification

The 3 months correlation between Eureka and Dine is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Eureka Acquisition Corp and Dine Brands Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dine Brands Global and Eureka Acquisition 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 Eureka Acquisition Corp are associated (or correlated) with Dine Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dine Brands Global has no effect on the direction of Eureka Acquisition i.e., Eureka Acquisition and Dine Brands go up and down completely randomly.

Pair Corralation between Eureka Acquisition and Dine Brands

Given the investment horizon of 90 days Eureka Acquisition Corp is expected to generate 0.03 times more return on investment than Dine Brands. However, Eureka Acquisition Corp is 38.74 times less risky than Dine Brands. It trades about 0.24 of its potential returns per unit of risk. Dine Brands Global is currently generating about -0.15 per unit of risk. If you would invest  1,010  in Eureka Acquisition Corp on October 7, 2024 and sell it today you would earn a total of  6.00  from holding Eureka Acquisition Corp or generate 0.59% return on investment over 90 days.

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

Eureka Acquisition Corp  vs.  Dine Brands Global

Eureka Acquisition Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eureka Acquisition Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Eureka Acquisition is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

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.

Pair Trading with Eureka Acquisition and Dine Brands

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

The idea behind Eureka Acquisition Corp and Dine Brands Global 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.