Correlation Between Driven Brands and BrightView Holdings

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

Diversification Opportunities for Driven Brands and BrightView Holdings

-0.36

Correlation Coefficient

Driven Brands  BrightView Holdings

Very good diversification

The 3 months correlation between Driven and BrightView is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Driven Brands Holdings and BrightView Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BrightView Holdings 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 BrightView Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BrightView Holdings has no effect on the direction of Driven Brands i.e., Driven Brands and BrightView Holdings go up and down completely randomly.

Pair Corralation between Driven Brands and BrightView Holdings

Given the investment horizon of 90 days Driven Brands Holdings is expected to generate 0.96 times more return on investment than BrightView Holdings. However, Driven Brands Holdings is 1.04 times less risky than BrightView Holdings. It trades about 0.01 of its potential returns per unit of risk. BrightView Holdings is currently generating about -0.14 per unit of risk. If you would invest  1,550  in Driven Brands Holdings on January 8, 2025 and sell it today you would lose (7.00) from holding Driven Brands Holdings or give up 0.45% of portfolio value over 90 days.

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

Driven Brands Holdings  vs.  BrightView Holdings

Driven Brands Holdings

Risk-Adjusted Performance

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 very healthy basic indicators, Driven Brands is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

BrightView Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days BrightView 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 Stock's basic indicators remain fairly stable which may send shares a bit higher in May 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Driven Brands and BrightView Holdings

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

The idea behind Driven Brands Holdings and BrightView Holdings 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.