Correlation Between Bloomin Brands and Penn National
Can any of the company-specific risk be diversified away by investing in both Bloomin Brands and Penn National 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 Bloomin Brands and Penn National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bloomin Brands and Penn National Gaming, you can compare the effects of market volatilities on Bloomin Brands and Penn National 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 Bloomin Brands with a short position of Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bloomin Brands and Penn National.
Diversification Opportunities for Bloomin Brands and Penn National
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bloomin and Penn is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bloomin Brands and Penn National Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penn National Gaming and Bloomin Brands 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 Bloomin Brands are associated (or correlated) with Penn National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penn National Gaming has no effect on the direction of Bloomin Brands i.e., Bloomin Brands and Penn National go up and down completely randomly.
Pair Corralation between Bloomin Brands and Penn National
Given the investment horizon of 90 days Bloomin Brands is expected to under-perform the Penn National. In addition to that, Bloomin Brands is 1.47 times more volatile than Penn National Gaming. It trades about -0.16 of its total potential returns per unit of risk. Penn National Gaming is currently generating about 0.12 per unit of volatility. If you would invest 1,989 in Penn National Gaming on August 28, 2024 and sell it today you would earn a total of 128.00 from holding Penn National Gaming or generate 6.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bloomin Brands vs. Penn National Gaming
Performance |
| Timeline |
| Bloomin Brands |
| Penn National Gaming |
Bloomin Brands and Penn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bloomin Brands and Penn National
The main advantage of trading using opposite Bloomin Brands and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bloomin Brands position performs unexpectedly, Penn National 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 Penn National will offset losses from the drop in Penn National's long position.| Bloomin Brands vs. Dine Brands Global | Bloomin Brands vs. BJs Restaurants | Bloomin Brands vs. The Cheesecake Factory | Bloomin Brands vs. Brinker International |
| Penn National vs. DraftKings | Penn National vs. MGM Resorts International | Penn National vs. Caesars Entertainment | Penn National vs. Boyd Gaming |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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