Correlation Between Brinker International and Shoe Carnival
Can any of the company-specific risk be diversified away by investing in both Brinker International and Shoe 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 Shoe 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 Shoe Carnival, you can compare the effects of market volatilities on Brinker International and Shoe 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 Shoe Carnival. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brinker International and Shoe Carnival.
Diversification Opportunities for Brinker International and Shoe Carnival
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Brinker and Shoe is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Brinker International and Shoe Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoe 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 Shoe Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoe Carnival has no effect on the direction of Brinker International i.e., Brinker International and Shoe Carnival go up and down completely randomly.
Pair Corralation between Brinker International and Shoe Carnival
Considering the 90-day investment horizon Brinker International is expected to generate 0.98 times more return on investment than Shoe Carnival. However, Brinker International is 1.02 times less risky than Shoe Carnival. It trades about 0.45 of its potential returns per unit of risk. Shoe Carnival is currently generating about -0.08 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 Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brinker International vs. Shoe Carnival
Performance |
| Timeline |
| Brinker International |
| Shoe Carnival |
Brinker International and Shoe Carnival Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brinker International and Shoe Carnival
The main advantage of trading using opposite Brinker International and Shoe Carnival positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brinker International position performs unexpectedly, Shoe 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 Shoe Carnival will offset losses from the drop in Shoe 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 |
| Shoe Carnival vs. Citi Trends | Shoe Carnival vs. Zumiez Inc | Shoe Carnival vs. Buckle Inc | Shoe Carnival vs. Cato Corporation |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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