Correlation Between Brinker International and Carnival
Can any of the company-specific risk be diversified away by investing in both Brinker International and Carnival 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 Carnival into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brinker International and Carnival, you can compare the effects of market volatilities on Brinker International and Carnival 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 Carnival. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brinker International and Carnival.
Diversification Opportunities for Brinker International and Carnival
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Brinker and Carnival is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Brinker International and Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival 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 Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival has no effect on the direction of Brinker International i.e., Brinker International and Carnival go up and down completely randomly.
Pair Corralation between Brinker International and Carnival
Considering the 90-day investment horizon Brinker International is expected to generate 1.14 times more return on investment than Carnival. However, Brinker International is 1.14 times more volatile than Carnival. It trades about 0.45 of its potential returns per unit of risk. Carnival is currently generating about 0.29 per unit of risk. If you would invest 10,425 in Brinker International on August 31, 2024 and sell it today you would earn a total of 2,644 from holding Brinker International or generate 25.36% 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. Carnival
Performance |
| Timeline |
| Brinker International |
| Carnival |
Brinker International and Carnival Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brinker International and Carnival
The main advantage of trading using opposite Brinker International and Carnival positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brinker International position performs unexpectedly, Carnival 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 Carnival will offset losses from the drop in Carnival's long position.| Brinker International vs. Dennys Corp | Brinker International vs. Bloomin Brands | Brinker International vs. Jack In The | Brinker International vs. Dine Brands Global |
| Carnival vs. Royal Caribbean Cruises | Carnival vs. Airbnb Inc | Carnival vs. Expedia Group | Carnival vs. Booking Holdings |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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