Correlation Between Darden Restaurants, and Mastercard Incorporated

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

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

Diversification Opportunities for Darden Restaurants, and Mastercard Incorporated

-0.02

Correlation Coefficient

Darden Restaurants,  Mastercard Incorporated

Good diversification

The 3 months correlation between Darden and Mastercard is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Darden Restaurants, and Mastercard Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard Incorporated 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 Mastercard Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastercard Incorporated has no effect on the direction of Darden Restaurants, i.e., Darden Restaurants, and Mastercard Incorporated go up and down completely randomly.

Pair Corralation between Darden Restaurants, and Mastercard Incorporated

Assuming the 90 days trading horizon Darden Restaurants, is expected to generate 1.05 times more return on investment than Mastercard Incorporated. However, Darden Restaurants, is 1.05 times more volatile than Mastercard Incorporated. It trades about 0.07 of its potential returns per unit of risk. Mastercard Incorporated is currently generating about 0.07 per unit of risk. If you would invest  18,295  in Darden Restaurants, on April 24, 2025 and sell it today you would earn a total of  11,706  from holding Darden Restaurants, or generate 63.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Darden Restaurants,  vs.  Mastercard Incorporated

Darden Restaurants,

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Darden Restaurants, are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Darden Restaurants, may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Mastercard Incorporated

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard Incorporated are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Mastercard Incorporated is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Darden Restaurants, and Mastercard Incorporated

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

The idea behind Darden Restaurants, and Mastercard Incorporated 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.