Correlation Between BBQ Holdings and Dunkin Brands

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

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

Diversification Opportunities for BBQ Holdings and Dunkin Brands

0.0

Correlation Coefficient

BBQ Holdings  Dunkin Brands

Pay attention - limited upside

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

Pair Corralation between BBQ Holdings and Dunkin Brands

If you would invest (100.00) in Dunkin Brands Group on January 19, 2024 and sell it today you would earn a total of  100.00  from holding Dunkin Brands Group 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

BBQ Holdings  vs.  Dunkin Brands Group

BBQ Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BBQ Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, BBQ Holdings is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Dunkin Brands Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dunkin Brands Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, Dunkin Brands is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BBQ Holdings and Dunkin Brands

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

The idea behind BBQ Holdings and Dunkin Brands 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.