Correlation Between Dine Brands and Kate Spade

Can any of the company-specific risk be diversified away by investing in both Dine Brands and Kate Spade 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 Kate Spade 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 Kate Spade, you can compare the effects of market volatilities on Dine Brands and Kate Spade 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 Kate Spade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dine Brands and Kate Spade.

Diversification Opportunities for Dine Brands and Kate Spade

0.0

Correlation Coefficient

Dine Brands  Kate Spade

Pay attention - limited upside

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

Pair Corralation between Dine Brands and Kate Spade

If you would invest (100.00) in Kate Spade on February 26, 2024 and sell it today you would earn a total of  100.00  from holding Kate Spade or generate -100.0% 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.  Kate Spade

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 unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Kate Spade

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kate Spade has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Kate Spade is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Dine Brands and Kate Spade

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

The idea behind Dine Brands Global and Kate Spade 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.

Check out your portfolio center.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.