Correlation Between GFL ENVIRONM(SUBVTSH and Darden Restaurants

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

By analyzing existing cross correlation between GFL ENVIRONM and Darden Restaurants, you can compare the effects of market volatilities on GFL ENVIRONM(SUBVTSH and Darden Restaurants 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 GFL ENVIRONM(SUBVTSH with a short position of Darden Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFL ENVIRONM(SUBVTSH and Darden Restaurants.

Diversification Opportunities for GFL ENVIRONM(SUBVTSH and Darden Restaurants

-0.19

Correlation Coefficient

GFL ENVIRONM(SUBVTSH  Darden Restaurants

Good diversification

The 3 months correlation between GFL and Darden is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding GFL ENVIRONM and Darden Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darden Restaurants and GFL ENVIRONM(SUBVTSH 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 GFL ENVIRONM are associated (or correlated) with Darden Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darden Restaurants has no effect on the direction of GFL ENVIRONM(SUBVTSH i.e., GFL ENVIRONM(SUBVTSH and Darden Restaurants go up and down completely randomly.

Pair Corralation between GFL ENVIRONM(SUBVTSH and Darden Restaurants

Assuming the 90 days horizon GFL ENVIRONM is expected to under-perform the Darden Restaurants. But the stock apears to be less risky and, when comparing its historical volatility, GFL ENVIRONM is 1.43 times less risky than Darden Restaurants. The stock trades about -0.09 of its potential returns per unit of risk. The Darden Restaurants is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  16,315  in Darden Restaurants on December 1, 2024 and sell it today you would earn a total of  2,360  from holding Darden Restaurants or generate 14.47% return on investment over 90 days.

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

GFL ENVIRONM  vs.  Darden Restaurants

GFL ENVIRONM(SUBVTSH

Risk-Adjusted Performance

Very Weak

Over the last 90 days GFL ENVIRONM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Darden Restaurants

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Darden Restaurants are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Darden Restaurants unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GFL ENVIRONM(SUBVTSH and Darden Restaurants

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

The idea behind GFL ENVIRONM and Darden Restaurants 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.