Correlation Between Driven Brands and Acco Brands

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

By analyzing existing cross correlation between Driven Brands Holdings and Acco Brands, you can compare the effects of market volatilities on Driven Brands and Acco Brands 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 Driven Brands with a short position of Acco Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Driven Brands and Acco Brands.

Diversification Opportunities for Driven Brands and Acco Brands

0.84

Correlation Coefficient

Driven Brands  Acco Brands

Very poor diversification

The 3 months correlation between Driven and Acco is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Driven Brands Holdings and Acco Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acco Brands and Driven Brands 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 Driven Brands Holdings are associated (or correlated) with Acco Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acco Brands has no effect on the direction of Driven Brands i.e., Driven Brands and Acco Brands go up and down completely randomly.

Pair Corralation between Driven Brands and Acco Brands

Given the investment horizon of 90 days Driven Brands Holdings is expected to generate 0.89 times more return on investment than Acco Brands. However, Driven Brands Holdings is 1.12 times less risky than Acco Brands. It trades about -0.24 of its potential returns per unit of risk. Acco Brands is currently generating about -0.57 per unit of risk. If you would invest  1,676  in Driven Brands Holdings on October 9, 2024 and sell it today you would lose (107.00) from holding Driven Brands Holdings or give up 6.38% of portfolio value over 90 days.

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

Driven Brands Holdings  vs.  Acco Brands

Driven Brands Holdings

Risk-Adjusted Performance

8 of 100

OK

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

Acco Brands

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Acco Brands are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Acco Brands is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Driven Brands and Acco Brands

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

The idea behind Driven Brands Holdings and Acco Brands 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.