Correlation Between Brinker International and Noodles
Can any of the company-specific risk be diversified away by investing in both Brinker International and Noodles 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 Noodles into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brinker International and Noodles Company, you can compare the effects of market volatilities on Brinker International and Noodles 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 Noodles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brinker International and Noodles.
Diversification Opportunities for Brinker International and Noodles
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Brinker and Noodles is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Brinker International and Noodles Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noodles Company 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 Noodles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noodles Company has no effect on the direction of Brinker International i.e., Brinker International and Noodles go up and down completely randomly.
Pair Corralation between Brinker International and Noodles
Considering the 90-day investment horizon Brinker International is expected to generate 0.52 times more return on investment than Noodles. However, Brinker International is 1.93 times less risky than Noodles. It trades about 0.52 of its potential returns per unit of risk. Noodles Company is currently generating about -0.47 per unit of risk. If you would invest 9,773 in Brinker International on August 28, 2024 and sell it today you would earn a total of 3,325 from holding Brinker International or generate 34.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brinker International vs. Noodles Company
Performance |
| Timeline |
| Brinker International |
| Noodles Company |
Brinker International and Noodles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brinker International and Noodles
The main advantage of trading using opposite Brinker International and Noodles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brinker International position performs unexpectedly, Noodles 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 Noodles will offset losses from the drop in Noodles' long position.| Brinker International vs. Dennys Corp | Brinker International vs. Bloomin Brands | Brinker International vs. Jack In The | Brinker International vs. Dine Brands Global |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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