Correlation Between PUBLIC and Dine Brands

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

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

Diversification Opportunities for PUBLIC and Dine Brands

0.04

Correlation Coefficient

PUBLIC  Dine Brands

Significant diversification

The 3 months correlation between PUBLIC and Dine is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding PUBLIC SVC O 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 PUBLIC 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 PUBLIC SVC O 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 PUBLIC i.e., PUBLIC and Dine Brands go up and down completely randomly.

Pair Corralation between PUBLIC and Dine Brands

Assuming the 90 days trading horizon PUBLIC SVC O is expected to under-perform the Dine Brands. But the bond apears to be less risky and, when comparing its historical volatility, PUBLIC SVC O is 1.75 times less risky than Dine Brands. The bond trades about -0.11 of its potential returns per unit of risk. The Dine Brands Global is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,969  in Dine Brands Global on September 15, 2024 and sell it today you would earn a total of  147.00  from holding Dine Brands Global or generate 4.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	50.0%
Values	Daily Returns

PUBLIC SVC O  vs.  Dine Brands Global

PUBLIC SVC O

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PUBLIC SVC O has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for PUBLIC SVC O investors.

Dine Brands Global

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dine Brands Global are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Dine Brands may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PUBLIC and Dine Brands

The main advantage of trading using opposite PUBLIC and Dine Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PUBLIC 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 PUBLIC SVC O 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.