Correlation Between Driven Brands and IShares Global

Can any of the company-specific risk be diversified away by investing in both Driven Brands and IShares Global 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 IShares Global 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 iShares Global Industrials, you can compare the effects of market volatilities on Driven Brands and IShares Global 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 IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Driven Brands and IShares Global.

Diversification Opportunities for Driven Brands and IShares Global

-0.34

Correlation Coefficient

Driven Brands  IShares Global

Very good diversification

The 3 months correlation between Driven and IShares is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Driven Brands Holdings and iShares Global Industrials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Indus 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 IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Indus has no effect on the direction of Driven Brands i.e., Driven Brands and IShares Global go up and down completely randomly.

Pair Corralation between Driven Brands and IShares Global

Given the investment horizon of 90 days Driven Brands Holdings is expected to under-perform the IShares Global. In addition to that, Driven Brands is 7.4 times more volatile than iShares Global Industrials. It trades about -0.28 of its total potential returns per unit of risk. iShares Global Industrials is currently generating about 0.22 per unit of volatility. If you would invest  13,595  in iShares Global Industrials on February 23, 2024 and sell it today you would earn a total of  434.00  from holding iShares Global Industrials or generate 3.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Driven Brands Holdings  vs.  iShares Global Industrials

Driven Brands Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Driven Brands Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the ETF investors.

iShares Global Indus

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global Industrials are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, IShares Global is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Driven Brands and IShares Global

The main advantage of trading using opposite Driven Brands and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Driven Brands position performs unexpectedly, IShares Global 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 IShares Global will offset losses from the drop in IShares Global's long position.

The idea behind Driven Brands Holdings and iShares Global Industrials pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.