Correlation Between Brinker International and Las Vegas
Can any of the company-specific risk be diversified away by investing in both Brinker International and Las Vegas 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 Las Vegas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brinker International and Las Vegas Sands, you can compare the effects of market volatilities on Brinker International and Las Vegas 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 Las Vegas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brinker International and Las Vegas.
Diversification Opportunities for Brinker International and Las Vegas
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brinker and Las is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Brinker International and Las Vegas Sands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Las Vegas Sands 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 Las Vegas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Las Vegas Sands has no effect on the direction of Brinker International i.e., Brinker International and Las Vegas go up and down completely randomly.
Pair Corralation between Brinker International and Las Vegas
Considering the 90-day investment horizon Brinker International is expected to generate 1.38 times more return on investment than Las Vegas. However, Brinker International is 1.38 times more volatile than Las Vegas Sands. It trades about 0.2 of its potential returns per unit of risk. Las Vegas Sands is currently generating about 0.03 per unit of risk. If you would invest 3,756 in Brinker International on August 27, 2024 and sell it today you would earn a total of 8,806 from holding Brinker International or generate 234.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brinker International vs. Las Vegas Sands
Performance |
| Timeline |
| Brinker International |
| Las Vegas Sands |
Brinker International and Las Vegas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brinker International and Las Vegas
The main advantage of trading using opposite Brinker International and Las Vegas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brinker International position performs unexpectedly, Las Vegas 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 Las Vegas will offset losses from the drop in Las Vegas' long position.| Brinker International vs. Dennys Corp | Brinker International vs. Bloomin Brands | Brinker International vs. Jack In The | Brinker International vs. Dine Brands Global |
| Las Vegas vs. MGM Resorts International | Las Vegas vs. Caesars Entertainment | Las Vegas vs. Penn National Gaming | Las Vegas vs. Melco Resorts Entertainment |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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