Correlation Between Driven Brands and Interface
Can any of the company-specific risk be diversified away by investing in both Driven Brands and Interface 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 Interface 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 Interface, you can compare the effects of market volatilities on Driven Brands and Interface 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 Interface. Check out your portfolio center. Please also check ongoing floating volatility patterns of Driven Brands and Interface.
Diversification Opportunities for Driven Brands and Interface
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Driven and Interface is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Driven Brands Holdings and Interface in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interface 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 Interface. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interface has no effect on the direction of Driven Brands i.e., Driven Brands and Interface go up and down completely randomly.
Pair Corralation between Driven Brands and Interface
Given the investment horizon of 90 days Driven Brands is expected to generate 2.68 times less return on investment than Interface. But when comparing it to its historical volatility, Driven Brands Holdings is 2.92 times less risky than Interface. It trades about 0.27 of its potential returns per unit of risk. Interface is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,808 in Interface on August 26, 2024 and sell it today you would earn a total of 738.00 from holding Interface or generate 40.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Driven Brands Holdings vs. Interface
Performance |
| Timeline |
| Driven Brands Holdings |
| Interface |
Driven Brands and Interface Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Driven Brands and Interface
The main advantage of trading using opposite Driven Brands and Interface positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Driven Brands position performs unexpectedly, Interface 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 Interface will offset losses from the drop in Interface'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 |
| Interface vs. Quanex Building Products | Interface vs. Janus International Group | Interface vs. Apogee Enterprises | Interface vs. Gibraltar Industries |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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