Correlation Between Driven Brands and ZOOZ Power

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

Diversification Opportunities for Driven Brands and ZOOZ Power

0.78

Correlation Coefficient

Driven Brands  ZOOZ Power

Poor diversification

The 3 months correlation between Driven and ZOOZ is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Driven Brands Holdings and ZOOZ Power Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZOOZ Power 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 ZOOZ Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZOOZ Power has no effect on the direction of Driven Brands i.e., Driven Brands and ZOOZ Power go up and down completely randomly.

Pair Corralation between Driven Brands and ZOOZ Power

Given the investment horizon of 90 days Driven Brands Holdings is expected to generate 0.5 times more return on investment than ZOOZ Power. However, Driven Brands Holdings is 1.99 times less risky than ZOOZ Power. It trades about -0.15 of its potential returns per unit of risk. ZOOZ Power Ltd is currently generating about -0.18 per unit of risk. If you would invest  1,685  in Driven Brands Holdings on September 27, 2024 and sell it today you would lose (71.00) from holding Driven Brands Holdings or give up 4.21% of portfolio value over 90 days.

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

Driven Brands Holdings  vs.  ZOOZ Power Ltd

Driven Brands Holdings

Risk-Adjusted Performance

8 of 100

Modest

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.

ZOOZ Power

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ZOOZ Power Ltd are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, ZOOZ Power showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Driven Brands and ZOOZ Power

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

The idea behind Driven Brands Holdings and ZOOZ Power Ltd 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.