Correlation Between Darden Restaurants and CONAGRA FOODS
Can any of the company-specific risk be diversified away by investing in both Darden Restaurants and CONAGRA FOODS 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 CONAGRA FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Darden Restaurants and CONAGRA FOODS, you can compare the effects of market volatilities on Darden Restaurants and CONAGRA FOODS 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 CONAGRA FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Darden Restaurants and CONAGRA FOODS.
Diversification Opportunities for Darden Restaurants and CONAGRA FOODS
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Darden and CONAGRA is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Darden Restaurants and CONAGRA FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONAGRA FOODS 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 CONAGRA FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONAGRA FOODS has no effect on the direction of Darden Restaurants i.e., Darden Restaurants and CONAGRA FOODS go up and down completely randomly.
Pair Corralation between Darden Restaurants and CONAGRA FOODS
Assuming the 90 days trading horizon Darden Restaurants is expected to generate 1.19 times more return on investment than CONAGRA FOODS. However, Darden Restaurants is 1.19 times more volatile than CONAGRA FOODS. It trades about 0.36 of its potential returns per unit of risk. CONAGRA FOODS is currently generating about -0.09 per unit of risk. If you would invest 14,740 in Darden Restaurants on August 31, 2024 and sell it today you would earn a total of 1,795 from holding Darden Restaurants or generate 12.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Darden Restaurants vs. CONAGRA FOODS
Performance |
| Timeline |
| Darden Restaurants |
| CONAGRA FOODS |
Darden Restaurants and CONAGRA FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Darden Restaurants and CONAGRA FOODS
The main advantage of trading using opposite Darden Restaurants and CONAGRA FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Darden Restaurants position performs unexpectedly, CONAGRA FOODS 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 CONAGRA FOODS will offset losses from the drop in CONAGRA FOODS's long position.| Darden Restaurants vs. Apple Inc | Darden Restaurants vs. Apple Inc | Darden Restaurants vs. Apple Inc | Darden Restaurants vs. Apple Inc |
| CONAGRA FOODS vs. SIVERS SEMICONDUCTORS AB | CONAGRA FOODS vs. Darden Restaurants | CONAGRA FOODS vs. Reliance Steel Aluminum | CONAGRA FOODS vs. Q2M Managementberatung AG |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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