Correlation Between Dennys Corp and Sellas Life

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

By analyzing existing cross correlation between Dennys Corp and Sellas Life Sciences, you can compare the effects of market volatilities on Dennys Corp and Sellas Life 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 Sellas Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dennys Corp and Sellas Life.

Diversification Opportunities for Dennys Corp and Sellas Life

0.09

Correlation Coefficient

Dennys Corp  Sellas Life

Significant diversification

The 3 months correlation between Dennys and Sellas is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Dennys Corp and Sellas Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sellas Life Sciences 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 Sellas Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sellas Life Sciences has no effect on the direction of Dennys Corp i.e., Dennys Corp and Sellas Life go up and down completely randomly.

Pair Corralation between Dennys Corp and Sellas Life

Given the investment horizon of 90 days Dennys Corp is expected to generate 1.26 times more return on investment than Sellas Life. However, Dennys Corp is 1.26 times more volatile than Sellas Life Sciences. It trades about 0.05 of its potential returns per unit of risk. Sellas Life Sciences is currently generating about -0.1 per unit of risk. If you would invest  586.00  in Dennys Corp on September 12, 2024 and sell it today you would earn a total of  51.00  from holding Dennys Corp or generate 8.7% return on investment over 90 days.

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

Dennys Corp  vs.  Sellas Life Sciences

Dennys Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dennys Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Dennys Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Sellas Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sellas Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Dennys Corp and Sellas Life

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

The idea behind Dennys Corp and Sellas Life Sciences 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.