Correlation Between Darden Restaurants, and International Meal

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

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

Diversification Opportunities for Darden Restaurants, and International Meal

-0.82

Correlation Coefficient

Darden Restaurants,  International Meal

Pay attention - limited upside

The 3 months correlation between Darden and International is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Darden Restaurants, and International Meal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Meal 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 International Meal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Meal has no effect on the direction of Darden Restaurants, i.e., Darden Restaurants, and International Meal go up and down completely randomly.

Pair Corralation between Darden Restaurants, and International Meal

Assuming the 90 days trading horizon Darden Restaurants, is expected to generate 0.12 times more return on investment than International Meal. However, Darden Restaurants, is 8.41 times less risky than International Meal. It trades about 0.01 of its potential returns per unit of risk. International Meal is currently generating about -0.18 per unit of risk. If you would invest  27,948  in Darden Restaurants, on October 23, 2024 and sell it today you would earn a total of  6.00  from holding Darden Restaurants, or generate 0.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	94.44%
Values	Daily Returns

Darden Restaurants,  vs.  International Meal

Darden Restaurants,

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Darden Restaurants, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Darden Restaurants, sustained solid returns over the last few months and may actually be approaching a breakup point.

International Meal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Meal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Darden Restaurants, and International Meal

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

The idea behind Darden Restaurants, and International Meal 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.