Correlation Between CIFI Holdings and Darden Restaurants
Can any of the company-specific risk be diversified away by investing in both CIFI Holdings 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 CIFI Holdings and Darden Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CIFI Holdings Co and Darden Restaurants, you can compare the effects of market volatilities on CIFI Holdings 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 CIFI Holdings with a short position of Darden Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIFI Holdings and Darden Restaurants.
Diversification Opportunities for CIFI Holdings and Darden Restaurants
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CIFI and Darden is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding CIFI Holdings Co and Darden Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darden Restaurants and CIFI Holdings 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 CIFI Holdings Co 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 CIFI Holdings i.e., CIFI Holdings and Darden Restaurants go up and down completely randomly.
Pair Corralation between CIFI Holdings and Darden Restaurants
Assuming the 90 days horizon CIFI Holdings Co is expected to generate 7.77 times more return on investment than Darden Restaurants. However, CIFI Holdings is 7.77 times more volatile than Darden Restaurants. It trades about 0.03 of its potential returns per unit of risk. Darden Restaurants is currently generating about 0.05 per unit of risk. If you would invest 10.00 in CIFI Holdings Co on October 27, 2024 and sell it today you would lose (7.70) from holding CIFI Holdings Co or give up 77.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 99.8% |
Values | Daily Returns |
CIFI Holdings Co vs. Darden Restaurants
Performance |
Timeline |
CIFI Holdings |
Darden Restaurants |
CIFI Holdings and Darden Restaurants Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CIFI Holdings and Darden Restaurants
The main advantage of trading using opposite CIFI Holdings and Darden Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CIFI Holdings 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.CIFI Holdings vs. SEKISUI CHEMICAL | ||
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Check out your portfolio center.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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