Correlation Between Exponent and Driven Brands
Can any of the company-specific risk be diversified away by investing in both Exponent and Driven Brands 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 Exponent and Driven Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exponent and Driven Brands Holdings, you can compare the effects of market volatilities on Exponent and Driven Brands 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 Exponent with a short position of Driven Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exponent and Driven Brands.
Diversification Opportunities for Exponent and Driven Brands
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Exponent and Driven is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Exponent and Driven Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Driven Brands Holdings and Exponent 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 Exponent are associated (or correlated) with Driven Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Driven Brands Holdings has no effect on the direction of Exponent i.e., Exponent and Driven Brands go up and down completely randomly.
Pair Corralation between Exponent and Driven Brands
Given the investment horizon of 90 days Exponent is expected to generate 0.67 times more return on investment than Driven Brands. However, Exponent is 1.49 times less risky than Driven Brands. It trades about 0.01 of its potential returns per unit of risk. Driven Brands Holdings is currently generating about -0.01 per unit of risk. If you would invest 9,824 in Exponent on September 13, 2024 and sell it today you would lose (348.00) from holding Exponent or give up 3.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Exponent vs. Driven Brands Holdings
Performance |
| Timeline |
| Exponent |
| Driven Brands Holdings |
Exponent and Driven Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exponent and Driven Brands
The main advantage of trading using opposite Exponent and Driven Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exponent position performs unexpectedly, Driven Brands 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 Driven Brands will offset losses from the drop in Driven Brands' long position.| Exponent vs. CRA International | Exponent vs. Huron Consulting Group | Exponent vs. Forrester Research | Exponent vs. Resources Connection |
| Driven Brands vs. CarGurus | Driven Brands vs. KAR Auction Services | Driven Brands vs. Kingsway Financial Services | Driven Brands vs. Group 1 Automotive |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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