Correlation Between Brinker International and Carsales

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Can any of the company-specific risk be diversified away by investing in both Brinker International and Carsales 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 Carsales into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brinker International and CarsalesCom, you can compare the effects of market volatilities on Brinker International and Carsales 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 Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brinker International and Carsales.

Diversification Opportunities for Brinker International and Carsales

BrinkerCarsalesDiversified AwayBrinkerCarsalesDiversified Away100%
0.13
  Correlation Coefficient

Average diversification

The 3 months correlation between Brinker and Carsales is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Brinker International and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom 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 Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of Brinker International i.e., Brinker International and Carsales go up and down completely randomly.

Pair Corralation between Brinker International and Carsales

Assuming the 90 days horizon Brinker International is expected to generate 1.92 times more return on investment than Carsales. However, Brinker International is 1.92 times more volatile than CarsalesCom. It trades about -0.05 of its potential returns per unit of risk. CarsalesCom is currently generating about -0.13 per unit of risk. If you would invest  16,400  in Brinker International on November 30, 2024 and sell it today you would lose (1,000.00) from holding Brinker International or give up 6.1% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

Brinker International  vs.  CarsalesCom

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-1001020
JavaScript chart by amCharts 3.21.15BKJ WN6
       Timeline  
Brinker International 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Brinker International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Brinker International reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb120130140150160170180
CarsalesCom 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days CarsalesCom has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb21.52222.52323.52424.52525.5

Brinker International and Carsales Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-11.09-8.31-5.52-2.740.04642.95.858.8111.76 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15BKJ WN6
       Returns  

Pair Trading with Brinker International and Carsales

The main advantage of trading using opposite Brinker International and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brinker International position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' long position.
The idea behind Brinker International and CarsalesCom 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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