Correlation Between FactSet Research and Dennys Corp

Can any of the company-specific risk be diversified away by investing in both FactSet Research and Dennys Corp 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 FactSet Research and Dennys Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FactSet Research Systems and Dennys Corp, you can compare the effects of market volatilities on FactSet Research and Dennys Corp 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 FactSet Research with a short position of Dennys Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of FactSet Research and Dennys Corp.

Diversification Opportunities for FactSet Research and Dennys Corp

-0.05

Correlation Coefficient

FactSet Research  Dennys Corp

Good diversification

The 3 months correlation between FactSet and Dennys is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding FactSet Research Systems and Dennys Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dennys Corp and FactSet Research 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 FactSet Research Systems are associated (or correlated) with Dennys Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dennys Corp has no effect on the direction of FactSet Research i.e., FactSet Research and Dennys Corp go up and down completely randomly.

Pair Corralation between FactSet Research and Dennys Corp

Considering the 90-day investment horizon FactSet Research Systems is expected to under-perform the Dennys Corp. But the stock apears to be less risky and, when comparing its historical volatility, FactSet Research Systems is 2.12 times less risky than Dennys Corp. The stock trades about -0.02 of its potential returns per unit of risk. The Dennys Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  607.00  in Dennys Corp on October 8, 2024 and sell it today you would earn a total of  34.00  from holding Dennys Corp or generate 5.6% return on investment over 90 days.

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

FactSet Research Systems  vs.  Dennys Corp

FactSet Research Systems

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FactSet Research Systems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, FactSet Research is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Dennys Corp

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dennys Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Dennys Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FactSet Research and Dennys Corp

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

The idea behind FactSet Research Systems and Dennys Corp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.