Correlation Between Dine Brands and KFT

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

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

Diversification Opportunities for Dine Brands and KFT

0.0

Correlation Coefficient

Dine Brands  KFT

Pay attention - limited upside

The 3 months correlation between Dine and KFT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Dine Brands Global and KFT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KFT and Dine Brands 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 Dine Brands Global are associated (or correlated) with KFT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KFT has no effect on the direction of Dine Brands i.e., Dine Brands and KFT go up and down completely randomly.

Pair Corralation between Dine Brands and KFT

If you would invest  4,322  in Dine Brands Global on February 5, 2024 and sell it today you would earn a total of  61.00  from holding Dine Brands Global or generate 1.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Dine Brands Global  vs.  KFT

Dine Brands Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dine Brands Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Dine Brands is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

KFT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KFT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, KFT is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Dine Brands and KFT

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

The idea behind Dine Brands Global and KFT 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.