Correlation Between Dave Busters and Capstead Mortgage

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

By analyzing existing cross correlation between Dave Busters Entertainment and Capstead Mortgage, you can compare the effects of market volatilities on Dave Busters and Capstead Mortgage 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 Dave Busters with a short position of Capstead Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dave Busters and Capstead Mortgage.

Diversification Opportunities for Dave Busters and Capstead Mortgage

0.0

Correlation Coefficient

Dave Busters  Capstead Mortgage

Pay attention - limited upside

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

Pair Corralation between Dave Busters and Capstead Mortgage

If you would invest  3,725  in Dave Busters Entertainment on February 26, 2024 and sell it today you would earn a total of  1,256  from holding Dave Busters Entertainment or generate 33.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Dave Busters Entertainment  vs.  Capstead Mortgage

Dave Busters Enterta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dave Busters Entertainment 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 basic indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Capstead Mortgage

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Capstead Mortgage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Capstead Mortgage is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Dave Busters and Capstead Mortgage

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

The idea behind Dave Busters Entertainment and Capstead Mortgage 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.