Correlation Between Loandepot and Dine Brands

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

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

Diversification Opportunities for Loandepot and Dine Brands

0.18

Correlation Coefficient

Loandepot  Dine Brands

Average diversification

The 3 months correlation between Loandepot and Dine is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Loandepot 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 Loandepot 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 Loandepot 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 Loandepot i.e., Loandepot and Dine Brands go up and down completely randomly.

Pair Corralation between Loandepot and Dine Brands

Considering the 90-day investment horizon Loandepot is expected to generate 1.81 times more return on investment than Dine Brands. However, Loandepot is 1.81 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 -0.03 per unit of risk. If you would invest  177.00  in Loandepot on September 21, 2024 and sell it today you would earn a total of  20.00  from holding Loandepot or generate 11.3% return on investment over 90 days.

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

Loandepot  vs.  Dine Brands Global

Loandepot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Loandepot has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 Loandepot and Dine Brands

The main advantage of trading using opposite Loandepot and Dine Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loandepot 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 Loandepot 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.