Correlation Between NYSE Composite and Driven Brands
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Driven Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Driven Brands Holdings, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Driven Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Driven Brands.
Diversification Opportunities for NYSE Composite and Driven Brands
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Driven is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Driven Brands go up and down completely randomly.
Pair Corralation between NYSE Composite and Driven Brands
Assuming the 90 days trading horizon NYSE Composite is expected to generate 4.4 times less return on investment than Driven Brands. But when comparing it to its historical volatility, NYSE Composite is 3.48 times less risky than Driven Brands. It trades about 0.29 of its potential returns per unit of risk. Driven Brands Holdings is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 1,419 in Driven Brands Holdings on August 31, 2024 and sell it today you would earn a total of 267.00 from holding Driven Brands Holdings or generate 18.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Driven Brands Holdings
Performance |
| Timeline |
NYSE Composite and Driven Brands Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Driven Brands Holdings
Pair trading matchups for Driven Brands
Pair Trading with NYSE Composite and Driven Brands
The main advantage of trading using opposite NYSE Composite and Driven Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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