Correlation Between Darden Restaurants and Assura PLC

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Can any of the company-specific risk be diversified away by investing in both Darden Restaurants and Assura PLC 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 Darden Restaurants and Assura PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Darden Restaurants and Assura PLC, you can compare the effects of market volatilities on Darden Restaurants and Assura PLC 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 Darden Restaurants with a short position of Assura PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Darden Restaurants and Assura PLC.

Diversification Opportunities for Darden Restaurants and Assura PLC

-0.52
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Darden and Assura is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Darden Restaurants and Assura PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assura PLC and Darden Restaurants 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 Darden Restaurants are associated (or correlated) with Assura PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assura PLC has no effect on the direction of Darden Restaurants i.e., Darden Restaurants and Assura PLC go up and down completely randomly.

Pair Corralation between Darden Restaurants and Assura PLC

Assuming the 90 days trading horizon Darden Restaurants is expected to generate 1.27 times less return on investment than Assura PLC. But when comparing it to its historical volatility, Darden Restaurants is 3.03 times less risky than Assura PLC. It trades about 0.05 of its potential returns per unit of risk. Assura PLC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  45.00  in Assura PLC on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Assura PLC or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Darden Restaurants  vs.  Assura PLC

 Performance 
       Timeline  
Darden Restaurants 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Darden Restaurants are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Darden Restaurants may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Assura PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Assura PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Assura PLC is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Darden Restaurants and Assura PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Darden Restaurants and Assura PLC

The main advantage of trading using opposite Darden Restaurants and Assura PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Darden Restaurants position performs unexpectedly, Assura PLC 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 Assura PLC will offset losses from the drop in Assura PLC's long position.
The idea behind Darden Restaurants and Assura PLC 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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