Correlation Between Darden Restaurants and METTLER TOLEDO

Can any of the company-specific risk be diversified away by investing in both Darden Restaurants and METTLER TOLEDO 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 Darden Restaurants and METTLER TOLEDO into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Darden Restaurants and METTLER TOLEDO INTL, you can compare the effects of market volatilities on Darden Restaurants and METTLER TOLEDO 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 Darden Restaurants with a short position of METTLER TOLEDO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Darden Restaurants and METTLER TOLEDO.

Diversification Opportunities for Darden Restaurants and METTLER TOLEDO

-0.18

Correlation Coefficient

Darden Restaurants  METTLER TOLEDO

Good diversification

The 3 months correlation between Darden and METTLER is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Darden Restaurants and METTLER TOLEDO INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METTLER TOLEDO INTL and Darden Restaurants 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 Darden Restaurants are associated (or correlated) with METTLER TOLEDO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METTLER TOLEDO INTL has no effect on the direction of Darden Restaurants i.e., Darden Restaurants and METTLER TOLEDO go up and down completely randomly.

Pair Corralation between Darden Restaurants and METTLER TOLEDO

Assuming the 90 days trading horizon Darden Restaurants is expected to generate 0.73 times more return on investment than METTLER TOLEDO. However, Darden Restaurants is 1.36 times less risky than METTLER TOLEDO. It trades about 0.06 of its potential returns per unit of risk. METTLER TOLEDO INTL is currently generating about 0.02 per unit of risk. If you would invest  13,548  in Darden Restaurants on August 2, 2024 and sell it today you would earn a total of  1,452  from holding Darden Restaurants or generate 10.72% return on investment over 90 days.

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

Darden Restaurants  vs.  METTLER TOLEDO INTL

Darden Restaurants

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Darden Restaurants are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Darden Restaurants unveiled solid returns over the last few months and may actually be approaching a breakup point.

METTLER TOLEDO INTL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days METTLER TOLEDO INTL 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 Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Darden Restaurants and METTLER TOLEDO

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

The idea behind Darden Restaurants and METTLER TOLEDO INTL 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.