Correlation Between Driven Brands and Penske Automotive
Can any of the company-specific risk be diversified away by investing in both Driven Brands and Penske Automotive 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 Penske Automotive 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 Penske Automotive Group, you can compare the effects of market volatilities on Driven Brands and Penske Automotive 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 Penske Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Driven Brands and Penske Automotive.
Diversification Opportunities for Driven Brands and Penske Automotive
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Driven and Penske is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Driven Brands Holdings and Penske Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penske Automotive 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 Penske Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penske Automotive has no effect on the direction of Driven Brands i.e., Driven Brands and Penske Automotive go up and down completely randomly.
Pair Corralation between Driven Brands and Penske Automotive
Given the investment horizon of 90 days Driven Brands Holdings is expected to generate 1.81 times more return on investment than Penske Automotive. However, Driven Brands is 1.81 times more volatile than Penske Automotive Group. It trades about 0.06 of its potential returns per unit of risk. Penske Automotive Group is currently generating about 0.06 per unit of risk. If you would invest 1,311 in Driven Brands Holdings on August 28, 2024 and sell it today you would earn a total of 393.00 from holding Driven Brands Holdings or generate 29.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Driven Brands Holdings vs. Penske Automotive Group
Performance |
| Timeline |
| Driven Brands Holdings |
| Penske Automotive |
Driven Brands and Penske Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Driven Brands and Penske Automotive
The main advantage of trading using opposite Driven Brands and Penske Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Driven Brands position performs unexpectedly, Penske Automotive 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 Penske Automotive will offset losses from the drop in Penske Automotive'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 |
| Penske Automotive vs. Group 1 Automotive | Penske Automotive vs. Lithia Motors | Penske Automotive vs. AutoNation | Penske Automotive vs. Asbury Automotive Group |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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