Correlation Between Darden Restaurants, and Energisa

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

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

Diversification Opportunities for Darden Restaurants, and Energisa

0.13

Correlation Coefficient

Darden Restaurants,  Energisa

Average diversification

The 3 months correlation between Darden and Energisa is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Darden Restaurants, and Energisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisa SA 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 Energisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energisa SA has no effect on the direction of Darden Restaurants, i.e., Darden Restaurants, and Energisa go up and down completely randomly.

Pair Corralation between Darden Restaurants, and Energisa

Assuming the 90 days trading horizon Darden Restaurants, is expected to generate 1.92 times less return on investment than Energisa. In addition to that, Darden Restaurants, is 1.04 times more volatile than Energisa SA. It trades about 0.05 of its total potential returns per unit of risk. Energisa SA is currently generating about 0.1 per unit of volatility. If you would invest  3,719  in Energisa SA on December 25, 2024 and sell it today you would earn a total of  401.00  from holding Energisa SA or generate 10.78% return on investment over 90 days.

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

Darden Restaurants,  vs.  Energisa SA

Darden Restaurants,

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Darden Restaurants, are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Darden Restaurants, is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Energisa SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Energisa SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Energisa may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Darden Restaurants, and Energisa

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

The idea behind Darden Restaurants, and Energisa SA 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.