Correlation Between MACOM Technology and Dennys Corp

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

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

Diversification Opportunities for MACOM Technology and Dennys Corp

0.81

Correlation Coefficient

MACOM Technology  Dennys Corp

Very poor diversification

The 3 months correlation between MACOM and Dennys is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Dennys Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dennys Corp and MACOM Technology 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 MACOM Technology Solutions 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 MACOM Technology i.e., MACOM Technology and Dennys Corp go up and down completely randomly.

Pair Corralation between MACOM Technology and Dennys Corp

Given the investment horizon of 90 days MACOM Technology Solutions is expected to generate 0.75 times more return on investment than Dennys Corp. However, MACOM Technology Solutions is 1.33 times less risky than Dennys Corp. It trades about -0.07 of its potential returns per unit of risk. Dennys Corp is currently generating about -0.13 per unit of risk. If you would invest  13,530  in MACOM Technology Solutions on December 25, 2024 and sell it today you would lose (2,246) from holding MACOM Technology Solutions or give up 16.6% of portfolio value over 90 days.

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

MACOM Technology Solutions  vs.  Dennys Corp

MACOM Technology Sol

Risk-Adjusted Performance

Very Weak

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

Dennys Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dennys Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with MACOM Technology and Dennys Corp

The main advantage of trading using opposite MACOM Technology and Dennys Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology 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 MACOM Technology Solutions 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.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.