Correlation Between Dennys Corp and Galaxy Payroll

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

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

Diversification Opportunities for Dennys Corp and Galaxy Payroll

0.39

Correlation Coefficient

Dennys Corp  Galaxy Payroll

Weak diversification

The 3 months correlation between Dennys and Galaxy is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Dennys Corp and Galaxy Payroll Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galaxy Payroll Group and Dennys Corp 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 Dennys Corp are associated (or correlated) with Galaxy Payroll. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galaxy Payroll Group has no effect on the direction of Dennys Corp i.e., Dennys Corp and Galaxy Payroll go up and down completely randomly.

Pair Corralation between Dennys Corp and Galaxy Payroll

Given the investment horizon of 90 days Dennys Corp is expected to generate 0.25 times more return on investment than Galaxy Payroll. However, Dennys Corp is 3.98 times less risky than Galaxy Payroll. It trades about 0.0 of its potential returns per unit of risk. Galaxy Payroll Group is currently generating about -0.06 per unit of risk. If you would invest  652.00  in Dennys Corp on September 14, 2024 and sell it today you would lose (27.00) from holding Dennys Corp or give up 4.14% of portfolio value over 90 days.

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

Dennys Corp  vs.  Galaxy Payroll Group

Dennys Corp

Risk-Adjusted Performance

0 of 100

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 recent stock price disarray, may contribute to short-term losses for the investors.

Galaxy Payroll Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Galaxy Payroll Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Dennys Corp and Galaxy Payroll

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

The idea behind Dennys Corp and Galaxy Payroll Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.