Correlation Between Bellevue Healthcare and Darden Restaurants

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

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

Diversification Opportunities for Bellevue Healthcare and Darden Restaurants

-0.45

Correlation Coefficient

Bellevue Healthcare  Darden Restaurants

Very good diversification

The 3 months correlation between Bellevue and Darden is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bellevue Healthcare Trust and Darden Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darden Restaurants and Bellevue Healthcare 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 Bellevue Healthcare Trust 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 Bellevue Healthcare i.e., Bellevue Healthcare and Darden Restaurants go up and down completely randomly.

Pair Corralation between Bellevue Healthcare and Darden Restaurants

Assuming the 90 days trading horizon Bellevue Healthcare Trust is expected to under-perform the Darden Restaurants. But the stock apears to be less risky and, when comparing its historical volatility, Bellevue Healthcare Trust is 1.77 times less risky than Darden Restaurants. The stock trades about -0.11 of its potential returns per unit of risk. The Darden Restaurants is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  15,949  in Darden Restaurants on September 14, 2024 and sell it today you would earn a total of  609.00  from holding Darden Restaurants or generate 3.82% return on investment over 90 days.

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

Bellevue Healthcare Trust  vs.  Darden Restaurants

Bellevue Healthcare Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bellevue Healthcare Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Darden Restaurants

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Darden Restaurants are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Darden Restaurants is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bellevue Healthcare and Darden Restaurants

The main advantage of trading using opposite Bellevue Healthcare and Darden Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bellevue Healthcare 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.

The idea behind Bellevue Healthcare Trust and Darden Restaurants 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.