Correlation Between Brinker International and Rave Restaurant
Can any of the company-specific risk be diversified away by investing in both Brinker International and Rave Restaurant 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 Rave Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brinker International and Rave Restaurant Group, you can compare the effects of market volatilities on Brinker International and Rave Restaurant 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 Rave Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brinker International and Rave Restaurant.
Diversification Opportunities for Brinker International and Rave Restaurant
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Brinker and Rave is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Brinker International and Rave Restaurant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rave Restaurant Group 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 Rave Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rave Restaurant Group has no effect on the direction of Brinker International i.e., Brinker International and Rave Restaurant go up and down completely randomly.
Pair Corralation between Brinker International and Rave Restaurant
Considering the 90-day investment horizon Brinker International is expected to generate 0.9 times more return on investment than Rave Restaurant. However, Brinker International is 1.11 times less risky than Rave Restaurant. It trades about 0.52 of its potential returns per unit of risk. Rave Restaurant Group is currently generating about 0.02 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 Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brinker International vs. Rave Restaurant Group
Performance |
| Timeline |
| Brinker International |
| Rave Restaurant Group |
Brinker International and Rave Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brinker International and Rave Restaurant
The main advantage of trading using opposite Brinker International and Rave Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brinker International position performs unexpectedly, Rave Restaurant 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 Rave Restaurant will offset losses from the drop in Rave Restaurant'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 |
| Rave Restaurant vs. Ark Restaurants Corp | Rave Restaurant vs. One Group Hospitality | Rave Restaurant vs. Flanigans Enterprises | Rave Restaurant vs. Noble Romans |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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