Correlation Between Darden Restaurants and Hastings Technology

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

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

Diversification Opportunities for Darden Restaurants and Hastings Technology

-0.02

Correlation Coefficient

Darden Restaurants  Hastings Technology

Good diversification

The 3 months correlation between Darden and Hastings is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Darden Restaurants and Hastings Technology Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hastings Technology 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 Hastings Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hastings Technology has no effect on the direction of Darden Restaurants i.e., Darden Restaurants and Hastings Technology go up and down completely randomly.

Pair Corralation between Darden Restaurants and Hastings Technology

Assuming the 90 days trading horizon Darden Restaurants is expected to generate 0.35 times more return on investment than Hastings Technology. However, Darden Restaurants is 2.89 times less risky than Hastings Technology. It trades about 0.07 of its potential returns per unit of risk. Hastings Technology Metals is currently generating about -0.01 per unit of risk. If you would invest  17,982  in Darden Restaurants on December 31, 2024 and sell it today you would earn a total of  1,198  from holding Darden Restaurants or generate 6.66% return on investment over 90 days.

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

Darden Restaurants  vs.  Hastings Technology Metals

Darden Restaurants

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Darden Restaurants are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Darden Restaurants may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Hastings Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hastings Technology Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Hastings Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Darden Restaurants and Hastings Technology

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

The idea behind Darden Restaurants and Hastings Technology Metals 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.