Correlation Between Driven Brands and Hudson Global

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

Diversification Opportunities for Driven Brands and Hudson Global

-0.68

Correlation Coefficient

Driven Brands  Hudson Global

Excellent diversification

The 3 months correlation between Driven and Hudson is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Driven Brands Holdings and Hudson Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Global 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 Hudson Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hudson Global has no effect on the direction of Driven Brands i.e., Driven Brands and Hudson Global go up and down completely randomly.

Pair Corralation between Driven Brands and Hudson Global

Given the investment horizon of 90 days Driven Brands Holdings is expected to generate 0.58 times more return on investment than Hudson Global. However, Driven Brands Holdings is 1.71 times less risky than Hudson Global. It trades about 0.07 of its potential returns per unit of risk. Hudson Global is currently generating about 0.0 per unit of risk. If you would invest  1,571  in Driven Brands Holdings on September 21, 2024 and sell it today you would earn a total of  38.00  from holding Driven Brands Holdings or generate 2.42% return on investment over 90 days.

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

Driven Brands Holdings  vs.  Hudson Global

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.

Hudson Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hudson Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Driven Brands and Hudson Global

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

The idea behind Driven Brands Holdings and Hudson Global 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.