Correlation Between TMT Acquisition and Dennys Corp

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

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

Diversification Opportunities for TMT Acquisition and Dennys Corp

-0.05

Correlation Coefficient

TMT Acquisition  Dennys Corp

Good diversification

The 3 months correlation between TMT and Dennys is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding TMT Acquisition Corp and Dennys Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dennys Corp and TMT Acquisition 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 TMT Acquisition 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 TMT Acquisition i.e., TMT Acquisition and Dennys Corp go up and down completely randomly.

Pair Corralation between TMT Acquisition and Dennys Corp

If you would invest  607.00  in Dennys Corp on October 9, 2024 and sell it today you would earn a total of  33.00  from holding Dennys Corp or generate 5.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

TMT Acquisition Corp  vs.  Dennys Corp

TMT Acquisition Corp

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days TMT Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak fundamental indicators, TMT Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Dennys Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dennys Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Dennys Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with TMT Acquisition and Dennys Corp

The main advantage of trading using opposite TMT Acquisition and Dennys Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TMT Acquisition 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 TMT Acquisition 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.