Correlation Between Driven Brands and SAG Holdings

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

Diversification Opportunities for Driven Brands and SAG Holdings

-0.38

Correlation Coefficient

Driven Brands  SAG Holdings

Very good diversification

The 3 months correlation between Driven and SAG is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Driven Brands Holdings and SAG Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAG Holdings Limited 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 SAG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAG Holdings Limited has no effect on the direction of Driven Brands i.e., Driven Brands and SAG Holdings go up and down completely randomly.

Pair Corralation between Driven Brands and SAG Holdings

Given the investment horizon of 90 days Driven Brands Holdings is expected to under-perform the SAG Holdings. But the etf apears to be less risky and, when comparing its historical volatility, Driven Brands Holdings is 4.03 times less risky than SAG Holdings. The etf trades about -0.21 of its potential returns per unit of risk. The SAG Holdings Limited is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  294.00  in SAG Holdings Limited on October 8, 2024 and sell it today you would lose (8.00) from holding SAG Holdings Limited or give up 2.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Driven Brands Holdings  vs.  SAG Holdings Limited

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.

SAG Holdings Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SAG Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Driven Brands and SAG Holdings

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

The idea behind Driven Brands Holdings and SAG Holdings Limited 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.