Correlation Between Driven Brands and Ford
Can any of the company-specific risk be diversified away by investing in both Driven Brands and Ford 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 Ford 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 Ford Motor, you can compare the effects of market volatilities on Driven Brands and Ford 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 Ford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Driven Brands and Ford.
Diversification Opportunities for Driven Brands and Ford
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Driven and Ford is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Driven Brands Holdings and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor 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 Ford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Motor has no effect on the direction of Driven Brands i.e., Driven Brands and Ford go up and down completely randomly.
Pair Corralation between Driven Brands and Ford
Given the investment horizon of 90 days Driven Brands Holdings is expected to generate 4.2 times more return on investment than Ford. However, Driven Brands is 4.2 times more volatile than Ford Motor. It trades about 0.38 of its potential returns per unit of risk. Ford Motor is currently generating about -0.28 per unit of risk. If you would invest 1,410 in Driven Brands Holdings on August 30, 2024 and sell it today you would earn a total of 276.00 from holding Driven Brands Holdings or generate 19.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Driven Brands Holdings vs. Ford Motor
Performance |
| Timeline |
| Driven Brands Holdings |
| Ford Motor |
Driven Brands and Ford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Driven Brands and Ford
The main advantage of trading using opposite Driven Brands and Ford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Driven Brands position performs unexpectedly, Ford 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 Ford will offset losses from the drop in Ford's long position.| Driven Brands vs. CarGurus | Driven Brands vs. KAR Auction Services | Driven Brands vs. Kingsway Financial Services | Driven Brands vs. Group 1 Automotive |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |