Correlation Between Bloomin Brands and Restaurant Brands
Can any of the company-specific risk be diversified away by investing in both Bloomin Brands and Restaurant Brands 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 Restaurant Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bloomin Brands and Restaurant Brands International, you can compare the effects of market volatilities on Bloomin Brands and Restaurant Brands 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 Restaurant Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bloomin Brands and Restaurant Brands.
Diversification Opportunities for Bloomin Brands and Restaurant Brands
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bloomin and Restaurant is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Bloomin Brands and Restaurant Brands Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Restaurant Brands 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 Restaurant Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Restaurant Brands has no effect on the direction of Bloomin Brands i.e., Bloomin Brands and Restaurant Brands go up and down completely randomly.
Pair Corralation between Bloomin Brands and Restaurant Brands
Given the investment horizon of 90 days Bloomin Brands is expected to under-perform the Restaurant Brands. In addition to that, Bloomin Brands is 4.23 times more volatile than Restaurant Brands International. It trades about -0.16 of its total potential returns per unit of risk. Restaurant Brands International is currently generating about -0.08 per unit of volatility. If you would invest 7,110 in Restaurant Brands International on August 27, 2024 and sell it today you would lose (129.00) from holding Restaurant Brands International or give up 1.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bloomin Brands vs. Restaurant Brands Internationa
Performance |
| Timeline |
| Bloomin Brands |
| Restaurant Brands |
Bloomin Brands and Restaurant Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bloomin Brands and Restaurant Brands
The main advantage of trading using opposite Bloomin Brands and Restaurant Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bloomin Brands position performs unexpectedly, Restaurant Brands 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 Restaurant Brands will offset losses from the drop in Restaurant Brands' long position.| Bloomin Brands vs. Dine Brands Global | Bloomin Brands vs. BJs Restaurants | Bloomin Brands vs. The Cheesecake Factory | Bloomin Brands vs. Brinker International |
| Restaurant Brands vs. Yum Brands | Restaurant Brands vs. Papa Johns International | Restaurant Brands vs. Jack In The | Restaurant Brands vs. Dominos Pizza |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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