Correlation Between Insight Acquisition and Dine Brands

Can any of the company-specific risk be diversified away by investing in both Insight 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 Insight 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 Insight Acquisition Corp and Dine Brands Global, you can compare the effects of market volatilities on Insight 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 Insight Acquisition with a short position of Dine Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insight Acquisition and Dine Brands.

Diversification Opportunities for Insight Acquisition and Dine Brands

0.16

Correlation Coefficient

Insight Acquisition  Dine Brands

Average diversification

The 3 months correlation between Insight and Dine is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Insight 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 Insight 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 Insight 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 Insight Acquisition i.e., Insight Acquisition and Dine Brands go up and down completely randomly.

Pair Corralation between Insight Acquisition and Dine Brands

Assuming the 90 days horizon Insight Acquisition Corp is expected to generate 6.31 times more return on investment than Dine Brands. However, Insight Acquisition is 6.31 times more volatile than Dine Brands Global. It trades about 0.03 of its potential returns per unit of risk. Dine Brands Global is currently generating about -0.06 per unit of risk. If you would invest  13.00  in Insight Acquisition Corp on October 11, 2024 and sell it today you would earn a total of  0.00  from holding Insight Acquisition Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.97%
Values	Daily Returns

Insight Acquisition Corp  vs.  Dine Brands Global

Insight Acquisition Corp

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Insight Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly inconsistent basic indicators, Insight Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Insight Acquisition and Dine Brands

The main advantage of trading using opposite Insight Acquisition and Dine Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insight 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 Insight 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.