Correlation Between Altus Power and Darden Restaurants
Can any of the company-specific risk be diversified away by investing in both Altus Power and Darden Restaurants 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 Altus Power and Darden Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altus Power and Darden Restaurants, you can compare the effects of market volatilities on Altus Power and Darden Restaurants 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 Altus Power with a short position of Darden Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altus Power and Darden Restaurants.
Diversification Opportunities for Altus Power and Darden Restaurants
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Altus and Darden is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Altus Power and Darden Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darden Restaurants and Altus Power 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 Altus Power are associated (or correlated) with Darden Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darden Restaurants has no effect on the direction of Altus Power i.e., Altus Power and Darden Restaurants go up and down completely randomly.
Pair Corralation between Altus Power and Darden Restaurants
Given the investment horizon of 90 days Altus Power is expected to under-perform the Darden Restaurants. In addition to that, Altus Power is 3.57 times more volatile than Darden Restaurants. It trades about -0.11 of its total potential returns per unit of risk. Darden Restaurants is currently generating about -0.04 per unit of volatility. If you would invest 16,032 in Darden Restaurants on January 24, 2024 and sell it today you would lose (577.00) from holding Darden Restaurants or give up 3.6% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Altus Power vs. Darden Restaurants
Performance |
Timeline |
Altus Power |
Darden Restaurants |
Altus Power and Darden Restaurants Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Altus Power and Darden Restaurants
The main advantage of trading using opposite Altus Power and Darden Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altus Power position performs unexpectedly, Darden Restaurants 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 Darden Restaurants will offset losses from the drop in Darden Restaurants' long position.Altus Power vs. Ormat Technologies | Altus Power vs. Enlight Renewable Energy | Altus Power vs. Fluence Energy | Altus Power vs. Renew Energy Global |
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Check out your portfolio center.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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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