Correlation Between CONSTELLATION and Dine Brands

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

By analyzing existing cross correlation between CONSTELLATION BRANDS INC and Dine Brands Global, you can compare the effects of market volatilities on CONSTELLATION and Dine Brands 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 CONSTELLATION with a short position of Dine Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of CONSTELLATION and Dine Brands.

Diversification Opportunities for CONSTELLATION and Dine Brands

0.37

Correlation Coefficient

CONSTELLATION  Dine Brands

Weak diversification

The 3 months correlation between CONSTELLATION and Dine is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding CONSTELLATION BRANDS INC and Dine Brands Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dine Brands Global and CONSTELLATION 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 CONSTELLATION BRANDS INC are associated (or correlated) with Dine Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dine Brands Global has no effect on the direction of CONSTELLATION i.e., CONSTELLATION and Dine Brands go up and down completely randomly.

Pair Corralation between CONSTELLATION and Dine Brands

Assuming the 90 days trading horizon CONSTELLATION BRANDS INC is expected to under-perform the Dine Brands. But the bond apears to be less risky and, when comparing its historical volatility, CONSTELLATION BRANDS INC is 13.22 times less risky than Dine Brands. The bond trades about -0.02 of its potential returns per unit of risk. The Dine Brands Global is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,061  in Dine Brands Global on October 8, 2024 and sell it today you would lose (27.00) from holding Dine Brands Global or give up 0.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.4%
Values	Daily Returns

CONSTELLATION BRANDS INC  vs.  Dine Brands Global

CONSTELLATION BRANDS INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONSTELLATION BRANDS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CONSTELLATION is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dine Brands Global

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dine Brands Global are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile forward indicators, Dine Brands may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CONSTELLATION and Dine Brands

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

The idea behind CONSTELLATION BRANDS INC and Dine Brands Global 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.