Correlation Between Brinker International and Royal Caribbean
Can any of the company-specific risk be diversified away by investing in both Brinker International and Royal Caribbean 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 Royal Caribbean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brinker International and Royal Caribbean Cruises, you can compare the effects of market volatilities on Brinker International and Royal Caribbean 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 Royal Caribbean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brinker International and Royal Caribbean.
Diversification Opportunities for Brinker International and Royal Caribbean
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Brinker and Royal is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Brinker International and Royal Caribbean Cruises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Caribbean Cruises 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 Royal Caribbean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Caribbean Cruises has no effect on the direction of Brinker International i.e., Brinker International and Royal Caribbean go up and down completely randomly.
Pair Corralation between Brinker International and Royal Caribbean
Considering the 90-day investment horizon Brinker International is expected to generate 1.17 times more return on investment than Royal Caribbean. However, Brinker International is 1.17 times more volatile than Royal Caribbean Cruises. It trades about 0.46 of its potential returns per unit of risk. Royal Caribbean Cruises is currently generating about 0.36 per unit of risk. If you would invest 9,773 in Brinker International on August 27, 2024 and sell it today you would earn a total of 2,789 from holding Brinker International or generate 28.54% 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. Royal Caribbean Cruises
Performance |
| Timeline |
| Brinker International |
| Royal Caribbean Cruises |
Brinker International and Royal Caribbean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brinker International and Royal Caribbean
The main advantage of trading using opposite Brinker International and Royal Caribbean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brinker International position performs unexpectedly, Royal Caribbean 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 Royal Caribbean will offset losses from the drop in Royal Caribbean'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 |
| Royal Caribbean vs. Carnival | Royal Caribbean vs. Airbnb Inc | Royal Caribbean vs. Expedia Group | Royal Caribbean 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |