Correlation Between Dave Busters and Network CN

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

By analyzing existing cross correlation between Dave Busters Entertainment and Network CN, you can compare the effects of market volatilities on Dave Busters and Network CN 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 Dave Busters with a short position of Network CN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dave Busters and Network CN.

Diversification Opportunities for Dave Busters and Network CN

0.28

Correlation Coefficient

Dave Busters  Network CN

Modest diversification

The 3 months correlation between Dave and Network is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and Network CN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Network CN and Dave Busters 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 Dave Busters Entertainment are associated (or correlated) with Network CN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Network CN has no effect on the direction of Dave Busters i.e., Dave Busters and Network CN go up and down completely randomly.

Pair Corralation between Dave Busters and Network CN

Given the investment horizon of 90 days Dave Busters Entertainment is expected to under-perform the Network CN. But the stock apears to be less risky and, when comparing its historical volatility, Dave Busters Entertainment is 42.7 times less risky than Network CN. The stock trades about -0.01 of its potential returns per unit of risk. The Network CN is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  0.14  in Network CN on September 13, 2024 and sell it today you would earn a total of  5.86  from holding Network CN or generate 4185.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Dave Busters Entertainment  vs.  Network CN

Dave Busters Enterta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dave Busters Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Dave Busters is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Network CN

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Network CN are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Network CN displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dave Busters and Network CN

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

The idea behind Dave Busters Entertainment and Network CN 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.