Correlation Between Driven Brands and TrueBlue

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

Diversification Opportunities for Driven Brands and TrueBlue

-0.44

Correlation Coefficient

Driven Brands  TrueBlue

Very good diversification

The 3 months correlation between Driven and TrueBlue is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Driven Brands Holdings and TrueBlue in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrueBlue 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 TrueBlue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrueBlue has no effect on the direction of Driven Brands i.e., Driven Brands and TrueBlue go up and down completely randomly.

Pair Corralation between Driven Brands and TrueBlue

Given the investment horizon of 90 days Driven Brands Holdings is expected to generate 0.52 times more return on investment than TrueBlue. However, Driven Brands Holdings is 1.93 times less risky than TrueBlue. It trades about 0.01 of its potential returns per unit of risk. TrueBlue is currently generating about -0.14 per unit of risk. If you would invest  1,549  in Driven Brands Holdings on January 7, 2025 and sell it today you would lose (6.00) from holding Driven Brands Holdings or give up 0.39% of portfolio value over 90 days.

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

Driven Brands Holdings  vs.  TrueBlue

Driven Brands Holdings

Risk-Adjusted Performance

Insignificant

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.

TrueBlue

Risk-Adjusted Performance

Very Weak

Over the last 90 days TrueBlue has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in May 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Driven Brands and TrueBlue

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

The idea behind Driven Brands Holdings and TrueBlue 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.