Correlation Between Driven Brands and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Driven Brands and SPDR SP 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 SPDR SP 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 SPDR SP Aerospace, you can compare the effects of market volatilities on Driven Brands and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Driven Brands and SPDR SP.
Diversification Opportunities for Driven Brands and SPDR SP
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Driven and SPDR is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Driven Brands Holdings and SPDR SP Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Aerospace 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Aerospace has no effect on the direction of Driven Brands i.e., Driven Brands and SPDR SP go up and down completely randomly.
Pair Corralation between Driven Brands and SPDR SP
Given the investment horizon of 90 days Driven Brands Holdings is expected to generate 2.55 times more return on investment than SPDR SP. However, Driven Brands is 2.55 times more volatile than SPDR SP Aerospace. It trades about 0.05 of its potential returns per unit of risk. SPDR SP Aerospace is currently generating about 0.12 per unit of risk. If you would invest 1,310 in Driven Brands Holdings on August 24, 2024 and sell it today you would earn a total of 358.00 from holding Driven Brands Holdings or generate 27.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Driven Brands Holdings vs. SPDR SP Aerospace
Performance |
| Timeline |
| Driven Brands Holdings |
| SPDR SP Aerospace |
Driven Brands and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Driven Brands and SPDR SP
The main advantage of trading using opposite Driven Brands and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Driven Brands position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP'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 |
| SPDR SP vs. Invesco Aerospace Defense | SPDR SP vs. iShares Aerospace Defense | SPDR SP vs. SPDR SP Health | SPDR SP vs. SPDR SP Transportation |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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