Correlation Between Driven Brands and POTOMAC
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By analyzing existing cross correlation between Driven Brands Holdings and POTOMAC ELEC PWR, you can compare the effects of market volatilities on Driven Brands and POTOMAC 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 POTOMAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Driven Brands and POTOMAC.
Diversification Opportunities for Driven Brands and POTOMAC
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Driven and POTOMAC is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Driven Brands Holdings and POTOMAC ELEC PWR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POTOMAC ELEC PWR 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 POTOMAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POTOMAC ELEC PWR has no effect on the direction of Driven Brands i.e., Driven Brands and POTOMAC go up and down completely randomly.
Pair Corralation between Driven Brands and POTOMAC
Given the investment horizon of 90 days Driven Brands Holdings is expected to under-perform the POTOMAC. But the etf apears to be less risky and, when comparing its historical volatility, Driven Brands Holdings is 1.0 times less risky than POTOMAC. The etf trades about -0.14 of its potential returns per unit of risk. The POTOMAC ELEC PWR is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 8,330 in POTOMAC ELEC PWR on November 28, 2024 and sell it today you would earn a total of 434.00 from holding POTOMAC ELEC PWR or generate 5.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 71.43% |
| Values | Daily Returns |
Driven Brands Holdings vs. POTOMAC ELEC PWR
Performance |
| Timeline |
| Driven Brands Holdings |
| POTOMAC ELEC PWR |
Driven Brands and POTOMAC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Driven Brands and POTOMAC
The main advantage of trading using opposite Driven Brands and POTOMAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Driven Brands position performs unexpectedly, POTOMAC 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 POTOMAC will offset losses from the drop in POTOMAC'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 |
| POTOMAC vs. CVR Partners LP | POTOMAC vs. Genuine Parts Co | POTOMAC vs. American Vanguard | POTOMAC vs. MYT Netherlands Parent |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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