Correlation Between Leisure Fund and Driven Brands

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

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

Diversification Opportunities for Leisure Fund and Driven Brands

0.94

Correlation Coefficient

Leisure Fund  Driven Brands

Almost no diversification

The 3 months correlation between Leisure and Driven is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Leisure Fund Class 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 Leisure Fund 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 Leisure Fund Class 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 Leisure Fund i.e., Leisure Fund and Driven Brands go up and down completely randomly.

Pair Corralation between Leisure Fund and Driven Brands

Assuming the 90 days horizon Leisure Fund Class is expected to under-perform the Driven Brands. But the mutual fund apears to be less risky and, when comparing its historical volatility, Leisure Fund Class is 1.46 times less risky than Driven Brands. The mutual fund trades about -0.28 of its potential returns per unit of risk. The Driven Brands Holdings is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  1,687  in Driven Brands Holdings on October 4, 2024 and sell it today you would lose (73.00) from holding Driven Brands Holdings or give up 4.33% of portfolio value over 90 days.

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

Leisure Fund Class  vs.  Driven Brands Holdings

Leisure Fund Class

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Leisure Fund Class are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Leisure Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Driven Brands Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Driven Brands Holdings are ranked lower than 7 (%) 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 February 2025.

Pair Trading with Leisure Fund and Driven Brands

The main advantage of trading using opposite Leisure Fund and Driven Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leisure Fund 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 Leisure Fund Class 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 CEOs Directory module to screen CEOs from public companies around the world.