Correlation Between Rush Enterprises and Driven Brands

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

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

Diversification Opportunities for Rush Enterprises and Driven Brands

-0.17

Correlation Coefficient

Rush Enterprises  Driven Brands

Good diversification

The 3 months correlation between Rush and Driven is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Rush Enterprises A and Driven Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Driven Brands Holdings and Rush Enterprises 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 Rush Enterprises A are associated (or correlated) with Driven Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Driven Brands Holdings has no effect on the direction of Rush Enterprises i.e., Rush Enterprises and Driven Brands go up and down completely randomly.

Pair Corralation between Rush Enterprises and Driven Brands

Assuming the 90 days horizon Rush Enterprises is expected to generate 4.08 times less return on investment than Driven Brands. But when comparing it to its historical volatility, Rush Enterprises A is 1.0 times less risky than Driven Brands. It trades about 0.03 of its potential returns per unit of risk. Driven Brands Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,596  in Driven Brands Holdings on December 28, 2024 and sell it today you would earn a total of  193.00  from holding Driven Brands Holdings or generate 12.09% return on investment over 90 days.

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

Rush Enterprises A  vs.  Driven Brands Holdings

Rush Enterprises A

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rush Enterprises A are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, Rush Enterprises is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Driven Brands Holdings

Risk-Adjusted Performance

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.

Pair Trading with Rush Enterprises and Driven Brands

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

The idea behind Rush Enterprises A and Driven Brands Holdings 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.