Correlation Between Darden Restaurants and Safestore Holdings
Can any of the company-specific risk be diversified away by investing in both Darden Restaurants and Safestore Holdings 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 Safestore Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Darden Restaurants and Safestore Holdings plc, you can compare the effects of market volatilities on Darden Restaurants and Safestore Holdings 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 Safestore Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Darden Restaurants and Safestore Holdings.
Diversification Opportunities for Darden Restaurants and Safestore Holdings
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Darden and Safestore is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Darden Restaurants and Safestore Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safestore Holdings 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 Safestore Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safestore Holdings plc has no effect on the direction of Darden Restaurants i.e., Darden Restaurants and Safestore Holdings go up and down completely randomly.
Pair Corralation between Darden Restaurants and Safestore Holdings
Assuming the 90 days trading horizon Darden Restaurants is expected to generate 0.97 times more return on investment than Safestore Holdings. However, Darden Restaurants is 1.03 times less risky than Safestore Holdings. It trades about 0.09 of its potential returns per unit of risk. Safestore Holdings plc is currently generating about -0.24 per unit of risk. If you would invest 16,370 in Darden Restaurants on October 30, 2024 and sell it today you would earn a total of 1,340 from holding Darden Restaurants or generate 8.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 97.37% |
| Values | Daily Returns |
Darden Restaurants vs. Safestore Holdings plc
Performance |
| Timeline |
| Darden Restaurants |
| Safestore Holdings plc |
Darden Restaurants and Safestore Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Darden Restaurants and Safestore Holdings
The main advantage of trading using opposite Darden Restaurants and Safestore Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Darden Restaurants position performs unexpectedly, Safestore Holdings 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 Safestore Holdings will offset losses from the drop in Safestore Holdings' long position.| Darden Restaurants vs. WILLIS LEASE FIN | Darden Restaurants vs. SUN LIFE FINANCIAL | Darden Restaurants vs. UNITED RENTALS | Darden Restaurants vs. S E BANKEN A |
| Safestore Holdings vs. Materialise NV | Safestore Holdings vs. De Grey Mining | Safestore Holdings vs. Stag Industrial | Safestore Holdings vs. GALENA MINING LTD |
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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