Correlation Between Driven Brands and AutoNation

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

Diversification Opportunities for Driven Brands and AutoNation

0.33

Correlation Coefficient

Driven Brands  AutoNation

Weak diversification

The 3 months correlation between Driven and AutoNation is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Driven Brands Holdings and AutoNation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoNation 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 AutoNation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoNation has no effect on the direction of Driven Brands i.e., Driven Brands and AutoNation go up and down completely randomly.

Pair Corralation between Driven Brands and AutoNation

Given the investment horizon of 90 days Driven Brands Holdings is expected to under-perform the AutoNation. In addition to that, Driven Brands is 1.17 times more volatile than AutoNation. It trades about -0.09 of its total potential returns per unit of risk. AutoNation is currently generating about 0.07 per unit of volatility. If you would invest  21,043  in AutoNation on July 8, 2025 and sell it today you would earn a total of  1,395  from holding AutoNation or generate 6.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Driven Brands Holdings  vs.  AutoNation

Driven Brands Holdings

Risk-Adjusted Performance

Weakest

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 latest uncertain performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

AutoNation

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in AutoNation are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, AutoNation may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Pair Trading with Driven Brands and AutoNation

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

The idea behind Driven Brands Holdings and AutoNation 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.