Correlation Between Fiesta Restaurant and Brinker International
Can any of the company-specific risk be diversified away by investing in both Fiesta Restaurant and Brinker International 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 Fiesta Restaurant and Brinker International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fiesta Restaurant Group and Brinker International, you can compare the effects of market volatilities on Fiesta Restaurant and Brinker International 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 Fiesta Restaurant with a short position of Brinker International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiesta Restaurant and Brinker International.
Diversification Opportunities for Fiesta Restaurant and Brinker International
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fiesta and Brinker is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Fiesta Restaurant Group and Brinker International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinker International and Fiesta Restaurant 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 Fiesta Restaurant Group are associated (or correlated) with Brinker International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brinker International has no effect on the direction of Fiesta Restaurant i.e., Fiesta Restaurant and Brinker International go up and down completely randomly.
Pair Corralation between Fiesta Restaurant and Brinker International
Given the investment horizon of 90 days Fiesta Restaurant is expected to generate 1.56 times less return on investment than Brinker International. But when comparing it to its historical volatility, Fiesta Restaurant Group is 1.08 times less risky than Brinker International. It trades about 0.08 of its potential returns per unit of risk. Brinker International is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,256 in Brinker International on August 24, 2024 and sell it today you would earn a total of 9,115 from holding Brinker International or generate 279.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 32.12% |
| Values | Daily Returns |
Fiesta Restaurant Group vs. Brinker International
Performance |
| Timeline |
| Fiesta Restaurant |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Brinker International |
Fiesta Restaurant and Brinker International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fiesta Restaurant and Brinker International
The main advantage of trading using opposite Fiesta Restaurant and Brinker International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiesta Restaurant position performs unexpectedly, Brinker International 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 Brinker International will offset losses from the drop in Brinker International's long position.| Fiesta Restaurant vs. BJs Restaurants | Fiesta Restaurant vs. Dine Brands Global | Fiesta Restaurant vs. Brinker International | Fiesta Restaurant vs. FAT Brands |
| Brinker International vs. Bloomin Brands | Brinker International vs. BJs Restaurants | Brinker International vs. Darden Restaurants | Brinker International vs. Wingstop |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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