Correlation Between Unifi and Driven Brands

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

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

Diversification Opportunities for Unifi and Driven Brands

-0.2

Correlation Coefficient

Unifi  Driven Brands

Good diversification

The 3 months correlation between Unifi and Driven is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Unifi Inc 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 Unifi 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 Unifi Inc 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 Unifi i.e., Unifi and Driven Brands go up and down completely randomly.

Pair Corralation between Unifi and Driven Brands

Considering the 90-day investment horizon Unifi Inc is expected to generate 1.07 times more return on investment than Driven Brands. However, Unifi is 1.07 times more volatile than Driven Brands Holdings. It trades about -0.01 of its potential returns per unit of risk. Driven Brands Holdings is currently generating about -0.02 per unit of risk. If you would invest  851.00  in Unifi Inc on December 5, 2024 and sell it today you would lose (315.00) from holding Unifi Inc or give up 37.02% of portfolio value over 90 days.

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

Unifi Inc  vs.  Driven Brands Holdings

Unifi Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Unifi Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Unifi is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Driven Brands Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Driven Brands Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Driven Brands is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Unifi and Driven Brands

The main advantage of trading using opposite Unifi and Driven Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unifi 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 Unifi Inc 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.