Correlation Between Sable Offshore and Dennys Corp

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

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

Diversification Opportunities for Sable Offshore and Dennys Corp

0.31

Correlation Coefficient

Sable Offshore  Dennys Corp

Weak diversification

The 3 months correlation between Sable and Dennys is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore Corp and Dennys Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dennys Corp and Sable Offshore 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 Sable Offshore Corp 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 Sable Offshore i.e., Sable Offshore and Dennys Corp go up and down completely randomly.

Pair Corralation between Sable Offshore and Dennys Corp

Considering the 90-day investment horizon Sable Offshore Corp is expected to under-perform the Dennys Corp. In addition to that, Sable Offshore is 1.99 times more volatile than Dennys Corp. It trades about -0.04 of its total potential returns per unit of risk. Dennys Corp is currently generating about -0.08 per unit of volatility. If you would invest  633.00  in Dennys Corp on September 27, 2024 and sell it today you would lose (33.00) from holding Dennys Corp or give up 5.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Sable Offshore Corp  vs.  Dennys Corp

Sable Offshore Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sable Offshore Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Sable Offshore is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Dennys Corp

Risk-Adjusted Performance

0 of 100

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 very healthy basic indicators, Dennys Corp is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sable Offshore and Dennys Corp

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