Correlation Between Albertsons Companies and Dennys Corp

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

By analyzing existing cross correlation between Albertsons Companies and Dennys Corp, you can compare the effects of market volatilities on Albertsons Companies and Dennys Corp 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 Albertsons Companies with a short position of Dennys Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albertsons Companies and Dennys Corp.

Diversification Opportunities for Albertsons Companies and Dennys Corp

0.22

Correlation Coefficient

Albertsons Companies  Dennys Corp

Modest diversification

The 3 months correlation between Albertsons and Dennys is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Albertsons Companies and Dennys Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dennys Corp and Albertsons Companies 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 Albertsons Companies are associated (or correlated) with Dennys Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dennys Corp has no effect on the direction of Albertsons Companies i.e., Albertsons Companies and Dennys Corp go up and down completely randomly.

Pair Corralation between Albertsons Companies and Dennys Corp

Considering the 90-day investment horizon Albertsons Companies is expected to under-perform the Dennys Corp. But the stock apears to be less risky and, when comparing its historical volatility, Albertsons Companies is 2.69 times less risky than Dennys Corp. The stock trades about -0.09 of its potential returns per unit of risk. The Dennys Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  379.00  in Dennys Corp on May 5, 2025 and sell it today you would lose (19.00) from holding Dennys Corp or give up 5.01% of portfolio value over 90 days.

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

Albertsons Companies  vs.  Dennys Corp

Albertsons Companies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Albertsons Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Dennys Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Albertsons Companies and Dennys Corp

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

The idea behind Albertsons Companies and Dennys Corp 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.