Correlation Between Brinker International and Booking Holdings
Can any of the company-specific risk be diversified away by investing in both Brinker International and Booking Holdings 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 Booking Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brinker International and Booking Holdings, you can compare the effects of market volatilities on Brinker International and Booking Holdings 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 Booking Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brinker International and Booking Holdings.
Diversification Opportunities for Brinker International and Booking Holdings
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Brinker and Booking is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Brinker International and Booking Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booking Holdings 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 Booking Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Booking Holdings has no effect on the direction of Brinker International i.e., Brinker International and Booking Holdings go up and down completely randomly.
Pair Corralation between Brinker International and Booking Holdings
Considering the 90-day investment horizon Brinker International is expected to generate 1.63 times more return on investment than Booking Holdings. However, Brinker International is 1.63 times more volatile than Booking Holdings. It trades about 0.5 of its potential returns per unit of risk. Booking Holdings is currently generating about 0.45 per unit of risk. If you would invest 9,701 in Brinker International on August 30, 2024 and sell it today you would earn a total of 3,368 from holding Brinker International or generate 34.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brinker International vs. Booking Holdings
Performance |
| Timeline |
| Brinker International |
| Booking Holdings |
Brinker International and Booking Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brinker International and Booking Holdings
The main advantage of trading using opposite Brinker International and Booking Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brinker International position performs unexpectedly, Booking Holdings 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 Booking Holdings will offset losses from the drop in Booking Holdings' long position.| Brinker International vs. Dennys Corp | Brinker International vs. Bloomin Brands | Brinker International vs. Jack In The | Brinker International vs. Dine Brands Global |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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