Correlation Between Brinker International and Continental
Can any of the company-specific risk be diversified away by investing in both Brinker International and Continental 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 Brinker International and Continental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brinker International and Camden Property Trust, you can compare the effects of market volatilities on Brinker International and Continental 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 Brinker International with a short position of Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brinker International and Continental.
Diversification Opportunities for Brinker International and Continental
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brinker and Continental is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Brinker International and Camden Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camden Property Trust and Brinker International 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 Brinker International are associated (or correlated) with Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camden Property Trust has no effect on the direction of Brinker International i.e., Brinker International and Continental go up and down completely randomly.
Pair Corralation between Brinker International and Continental
Assuming the 90 days horizon Brinker International is expected to generate 2.63 times more return on investment than Continental. However, Brinker International is 2.63 times more volatile than Camden Property Trust. It trades about 0.13 of its potential returns per unit of risk. Camden Property Trust is currently generating about -0.22 per unit of risk. If you would invest 11,800 in Brinker International on September 23, 2024 and sell it today you would earn a total of 900.00 from holding Brinker International or generate 7.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brinker International vs. Camden Property Trust
Performance |
| Timeline |
| Brinker International |
| Camden Property Trust |
Brinker International and Continental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brinker International and Continental
The main advantage of trading using opposite Brinker International and Continental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brinker International position performs unexpectedly, Continental 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 Continental will offset losses from the drop in Continental's long position.| Brinker International vs. BORR DRILLING NEW | Brinker International vs. American Homes 4 | Brinker International vs. LGI Homes | Brinker International vs. Aedas Homes SA |
| Continental vs. Equity Residential | Continental vs. AvalonBay Communities | Continental vs. UDR Inc | Continental vs. INVITATION HOMES DL |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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