Correlation Between Studio City and Dine Brands

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

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

Diversification Opportunities for Studio City and Dine Brands

-0.55

Correlation Coefficient

Studio City  Dine Brands

Excellent diversification

The 3 months correlation between Studio and Dine is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Studio City International 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 Studio City 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 Studio City International 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 Studio City i.e., Studio City and Dine Brands go up and down completely randomly.

Pair Corralation between Studio City and Dine Brands

Considering the 90-day investment horizon Studio City International is expected to under-perform the Dine Brands. In addition to that, Studio City is 4.01 times more volatile than Dine Brands Global. It trades about -0.09 of its total potential returns per unit of risk. Dine Brands Global is currently generating about 0.04 per unit of volatility. If you would invest  4,333  in Dine Brands Global on February 13, 2024 and sell it today you would earn a total of  46.00  from holding Dine Brands Global or generate 1.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Studio City International  vs.  Dine Brands Global

Studio City International

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Studio City International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Studio City exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Studio City and Dine Brands

The main advantage of trading using opposite Studio City and Dine Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Studio City 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 Studio City International 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.