Correlation Between Driven Brands and ACV Auctions
Can any of the company-specific risk be diversified away by investing in both Driven Brands and ACV Auctions 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 Driven Brands and ACV Auctions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Driven Brands Holdings and ACV Auctions, you can compare the effects of market volatilities on Driven Brands and ACV Auctions 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 Driven Brands with a short position of ACV Auctions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Driven Brands and ACV Auctions.
Diversification Opportunities for Driven Brands and ACV Auctions
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Driven and ACV is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Driven Brands Holdings and ACV Auctions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACV Auctions and Driven Brands 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 Driven Brands Holdings are associated (or correlated) with ACV Auctions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACV Auctions has no effect on the direction of Driven Brands i.e., Driven Brands and ACV Auctions go up and down completely randomly.
Pair Corralation between Driven Brands and ACV Auctions
Given the investment horizon of 90 days Driven Brands Holdings is expected to under-perform the ACV Auctions. But the etf apears to be less risky and, when comparing its historical volatility, Driven Brands Holdings is 1.65 times less risky than ACV Auctions. The etf trades about -0.05 of its potential returns per unit of risk. The ACV Auctions is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,094 in ACV Auctions on October 20, 2024 and sell it today you would earn a total of 59.00 from holding ACV Auctions or generate 2.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Driven Brands Holdings vs. ACV Auctions
Performance |
| Timeline |
| Driven Brands Holdings |
| ACV Auctions |
Driven Brands and ACV Auctions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Driven Brands and ACV Auctions
The main advantage of trading using opposite Driven Brands and ACV Auctions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Driven Brands position performs unexpectedly, ACV Auctions 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 ACV Auctions will offset losses from the drop in ACV Auctions' long position.| Driven Brands vs. CarGurus | Driven Brands vs. KAR Auction Services | Driven Brands vs. Kingsway Financial Services | Driven Brands vs. Group 1 Automotive |
| ACV Auctions vs. CarGurus | ACV Auctions vs. KAR Auction Services | ACV Auctions vs. Kingsway Financial Services | ACV Auctions vs. Driven Brands 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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