Correlation Between Sweetgreen and Dennys Corp

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

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

Diversification Opportunities for Sweetgreen and Dennys Corp

0.73

Correlation Coefficient

Sweetgreen  Dennys Corp

Poor diversification

The 3 months correlation between Sweetgreen and Dennys is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and Dennys Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dennys Corp and Sweetgreen 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 Sweetgreen 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 Sweetgreen i.e., Sweetgreen and Dennys Corp go up and down completely randomly.

Pair Corralation between Sweetgreen and Dennys Corp

Allowing for the 90-day total investment horizon Sweetgreen is expected to generate 0.85 times more return on investment than Dennys Corp. However, Sweetgreen is 1.17 times less risky than Dennys Corp. It trades about -0.05 of its potential returns per unit of risk. Dennys Corp is currently generating about -0.13 per unit of risk. If you would invest  3,170  in Sweetgreen on December 29, 2024 and sell it today you would lose (517.00) from holding Sweetgreen or give up 16.31% of portfolio value over 90 days.

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

Sweetgreen  vs.  Dennys Corp

Sweetgreen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sweetgreen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 Sweetgreen and Dennys Corp

The main advantage of trading using opposite Sweetgreen and Dennys Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sweetgreen 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 Sweetgreen 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..