Correlation Between Darden Restaurants and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Darden Restaurants and Harmony Gold 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 Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Darden Restaurants and Harmony Gold Mining, you can compare the effects of market volatilities on Darden Restaurants and Harmony Gold 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 Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Darden Restaurants and Harmony Gold.
Diversification Opportunities for Darden Restaurants and Harmony Gold
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Darden and Harmony is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Darden Restaurants and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining 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 Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of Darden Restaurants i.e., Darden Restaurants and Harmony Gold go up and down completely randomly.
Pair Corralation between Darden Restaurants and Harmony Gold
Assuming the 90 days trading horizon Darden Restaurants is expected to generate 0.44 times more return on investment than Harmony Gold. However, Darden Restaurants is 2.29 times less risky than Harmony Gold. It trades about 0.28 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about -0.19 per unit of risk. If you would invest 14,985 in Darden Restaurants on August 29, 2024 and sell it today you would earn a total of 1,505 from holding Darden Restaurants or generate 10.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Darden Restaurants vs. Harmony Gold Mining
Performance |
| Timeline |
| Darden Restaurants |
| Harmony Gold Mining |
Darden Restaurants and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Darden Restaurants and Harmony Gold
The main advantage of trading using opposite Darden Restaurants and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Darden Restaurants position performs unexpectedly, Harmony Gold 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 Harmony Gold will offset losses from the drop in Harmony Gold's long position.| Darden Restaurants vs. Apple Inc | Darden Restaurants vs. Apple Inc | Darden Restaurants vs. Apple Inc | Darden Restaurants vs. Apple Inc |
| Harmony Gold vs. Franco Nevada | Harmony Gold vs. Wheaton Precious Metals | Harmony Gold vs. Superior Plus Corp | Harmony Gold vs. NMI Holdings |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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