Correlation Between Driven Brands and Ardagh Metal

Can any of the company-specific risk be diversified away by investing in both Driven Brands and Ardagh Metal 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 Ardagh Metal 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 Ardagh Metal Packaging, you can compare the effects of market volatilities on Driven Brands and Ardagh Metal 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 Ardagh Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Driven Brands and Ardagh Metal.

Diversification Opportunities for Driven Brands and Ardagh Metal

-0.49

Correlation Coefficient

Driven Brands  Ardagh Metal

Very good diversification

The 3 months correlation between Driven and Ardagh is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Driven Brands Holdings and Ardagh Metal Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardagh Metal Packaging 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 Ardagh Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardagh Metal Packaging has no effect on the direction of Driven Brands i.e., Driven Brands and Ardagh Metal go up and down completely randomly.

Pair Corralation between Driven Brands and Ardagh Metal

Given the investment horizon of 90 days Driven Brands Holdings is expected to under-perform the Ardagh Metal. In addition to that, Driven Brands is 1.22 times more volatile than Ardagh Metal Packaging. It trades about -0.02 of its total potential returns per unit of risk. Ardagh Metal Packaging is currently generating about -0.01 per unit of volatility. If you would invest  404.00  in Ardagh Metal Packaging on September 21, 2024 and sell it today you would lose (96.50) from holding Ardagh Metal Packaging or give up 23.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Driven Brands Holdings  vs.  Ardagh Metal Packaging

Driven Brands Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Driven Brands Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Driven Brands may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ardagh Metal Packaging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ardagh Metal Packaging has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Driven Brands and Ardagh Metal

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

The idea behind Driven Brands Holdings and Ardagh Metal Packaging 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.