Correlation Between Verisk Analytics and Driven Brands

Can any of the company-specific risk be diversified away by investing in both Verisk Analytics and Driven Brands 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 Verisk Analytics and Driven Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Verisk Analytics and Driven Brands Holdings, you can compare the effects of market volatilities on Verisk Analytics and Driven Brands 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 Verisk Analytics with a short position of Driven Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verisk Analytics and Driven Brands.

Diversification Opportunities for Verisk Analytics and Driven Brands

0.71

Correlation Coefficient

Verisk Analytics  Driven Brands

Poor diversification

The 3 months correlation between Verisk and Driven is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Verisk Analytics and Driven Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Driven Brands Holdings and Verisk Analytics 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 Verisk Analytics are associated (or correlated) with Driven Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Driven Brands Holdings has no effect on the direction of Verisk Analytics i.e., Verisk Analytics and Driven Brands go up and down completely randomly.

Pair Corralation between Verisk Analytics and Driven Brands

Given the investment horizon of 90 days Verisk Analytics is expected to generate 2.63 times less return on investment than Driven Brands. But when comparing it to its historical volatility, Verisk Analytics is 1.8 times less risky than Driven Brands. It trades about 0.12 of its potential returns per unit of risk. Driven Brands Holdings is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,428  in Driven Brands Holdings on August 19, 2024 and sell it today you would earn a total of  236.00  from holding Driven Brands Holdings or generate 16.53% return on investment over 90 days.

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

Verisk Analytics  vs.  Driven Brands Holdings

Verisk Analytics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Verisk Analytics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Verisk Analytics is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Driven Brands Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Driven Brands Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Driven Brands displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Verisk Analytics and Driven Brands

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

The idea behind Verisk Analytics and Driven Brands 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.