Correlation Between Darden Restaurants and MyHealthChecked Plc

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

By analyzing existing cross correlation between Darden Restaurants and MyHealthChecked Plc, you can compare the effects of market volatilities on Darden Restaurants and MyHealthChecked Plc 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 Darden Restaurants with a short position of MyHealthChecked Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Darden Restaurants and MyHealthChecked Plc.

Diversification Opportunities for Darden Restaurants and MyHealthChecked Plc

0.24

Correlation Coefficient

Darden Restaurants  MyHealthChecked Plc

Modest diversification

The 3 months correlation between Darden and MyHealthChecked is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Darden Restaurants and MyHealthChecked Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MyHealthChecked Plc and Darden Restaurants 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 Darden Restaurants are associated (or correlated) with MyHealthChecked Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MyHealthChecked Plc has no effect on the direction of Darden Restaurants i.e., Darden Restaurants and MyHealthChecked Plc go up and down completely randomly.

Pair Corralation between Darden Restaurants and MyHealthChecked Plc

Assuming the 90 days trading horizon Darden Restaurants is expected to generate 1.18 times less return on investment than MyHealthChecked Plc. But when comparing it to its historical volatility, Darden Restaurants is 2.14 times less risky than MyHealthChecked Plc. It trades about 0.08 of its potential returns per unit of risk. MyHealthChecked Plc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,125  in MyHealthChecked Plc on September 5, 2024 and sell it today you would earn a total of  75.00  from holding MyHealthChecked Plc or generate 6.67% return on investment over 90 days.

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

Darden Restaurants  vs.  MyHealthChecked Plc

Darden Restaurants

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Darden Restaurants are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Darden Restaurants may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MyHealthChecked Plc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MyHealthChecked Plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, MyHealthChecked Plc may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Darden Restaurants and MyHealthChecked Plc

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

The idea behind Darden Restaurants and MyHealthChecked Plc 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.