Correlation Between Darden Restaurants and Sirius Real

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

By analyzing existing cross correlation between Darden Restaurants and Sirius Real Estate, you can compare the effects of market volatilities on Darden Restaurants and Sirius Real 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 Sirius Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Darden Restaurants and Sirius Real.

Diversification Opportunities for Darden Restaurants and Sirius Real

0.09

Correlation Coefficient

Darden Restaurants  Sirius Real

Significant diversification

The 3 months correlation between Darden and Sirius is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Darden Restaurants and Sirius Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sirius Real Estate 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 Sirius Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sirius Real Estate has no effect on the direction of Darden Restaurants i.e., Darden Restaurants and Sirius Real go up and down completely randomly.

Pair Corralation between Darden Restaurants and Sirius Real

Assuming the 90 days trading horizon Darden Restaurants is expected to generate 1.17 times less return on investment than Sirius Real. In addition to that, Darden Restaurants is 1.1 times more volatile than Sirius Real Estate. It trades about 0.1 of its total potential returns per unit of risk. Sirius Real Estate is currently generating about 0.13 per unit of volatility. If you would invest  7,745  in Sirius Real Estate on December 23, 2024 and sell it today you would earn a total of  900.00  from holding Sirius Real Estate or generate 11.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Darden Restaurants  vs.  Sirius Real Estate

Darden Restaurants

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Darden Restaurants are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Darden Restaurants may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sirius Real Estate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sirius Real Estate are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sirius Real may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Darden Restaurants and Sirius Real

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

The idea behind Darden Restaurants and Sirius Real Estate 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.