Correlation Between Driven Brands and Leisure Fund
Can any of the company-specific risk be diversified away by investing in both Driven Brands and Leisure Fund 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 Leisure Fund 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 Leisure Fund Investor, you can compare the effects of market volatilities on Driven Brands and Leisure Fund 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 Leisure Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Driven Brands and Leisure Fund.
Diversification Opportunities for Driven Brands and Leisure Fund
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Driven and Leisure is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Driven Brands Holdings and Leisure Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leisure Fund Investor 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 Leisure Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leisure Fund Investor has no effect on the direction of Driven Brands i.e., Driven Brands and Leisure Fund go up and down completely randomly.
Pair Corralation between Driven Brands and Leisure Fund
Given the investment horizon of 90 days Driven Brands Holdings is expected to generate 3.0 times more return on investment than Leisure Fund. However, Driven Brands is 3.0 times more volatile than Leisure Fund Investor. It trades about 0.31 of its potential returns per unit of risk. Leisure Fund Investor is currently generating about 0.53 per unit of risk. If you would invest 1,475 in Driven Brands Holdings on September 2, 2024 and sell it today you would earn a total of 210.00 from holding Driven Brands Holdings or generate 14.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Driven Brands Holdings vs. Leisure Fund Investor
Performance |
| Timeline |
| Driven Brands Holdings |
| Leisure Fund Investor |
Driven Brands and Leisure Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Driven Brands and Leisure Fund
The main advantage of trading using opposite Driven Brands and Leisure Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Driven Brands position performs unexpectedly, Leisure Fund 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 Leisure Fund will offset losses from the drop in Leisure Fund'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 |
| Leisure Fund vs. Retailing Fund Investor | Leisure Fund vs. Financial Services Fund | Leisure Fund vs. Banking Fund Investor | Leisure Fund vs. Health Care Fund |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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