Correlation Between SIRIUS XM and Darden Restaurants
Can any of the company-specific risk be diversified away by investing in both SIRIUS XM and Darden Restaurants 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 SIRIUS XM and Darden Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIRIUS XM RADIO and Darden Restaurants, you can compare the effects of market volatilities on SIRIUS XM and Darden Restaurants 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 SIRIUS XM with a short position of Darden Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIRIUS XM and Darden Restaurants.
Diversification Opportunities for SIRIUS XM and Darden Restaurants
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SIRIUS and Darden is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding SIRIUS XM RADIO and Darden Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darden Restaurants and SIRIUS XM 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 SIRIUS XM RADIO are associated (or correlated) with Darden Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darden Restaurants has no effect on the direction of SIRIUS XM i.e., SIRIUS XM and Darden Restaurants go up and down completely randomly.
Pair Corralation between SIRIUS XM and Darden Restaurants
Assuming the 90 days trading horizon SIRIUS XM RADIO is expected to under-perform the Darden Restaurants. In addition to that, SIRIUS XM is 2.54 times more volatile than Darden Restaurants. It trades about -0.03 of its total potential returns per unit of risk. Darden Restaurants is currently generating about 0.05 per unit of volatility. If you would invest 12,662 in Darden Restaurants on September 2, 2024 and sell it today you would earn a total of 3,838 from holding Darden Restaurants or generate 30.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
SIRIUS XM RADIO vs. Darden Restaurants
Performance |
| Timeline |
| SIRIUS XM RADIO |
| Darden Restaurants |
SIRIUS XM and Darden Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIRIUS XM and Darden Restaurants
The main advantage of trading using opposite SIRIUS XM and Darden Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIRIUS XM position performs unexpectedly, Darden Restaurants 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 Darden Restaurants will offset losses from the drop in Darden Restaurants' long position.| SIRIUS XM vs. GEELY AUTOMOBILE | SIRIUS XM vs. Dave Busters Entertainment | SIRIUS XM vs. XLMedia PLC | SIRIUS XM vs. CNVISION MEDIA |
| Darden Restaurants vs. Apple Inc | Darden Restaurants vs. Apple Inc | Darden Restaurants vs. Apple Inc | Darden Restaurants vs. Apple Inc |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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