Correlation Between Good Times and Bloomin Brands
Can any of the company-specific risk be diversified away by investing in both Good Times and Bloomin Brands 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 Good Times and Bloomin Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Good Times Restaurants and Bloomin Brands, you can compare the effects of market volatilities on Good Times and Bloomin Brands 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 Good Times with a short position of Bloomin Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Good Times and Bloomin Brands.
Diversification Opportunities for Good Times and Bloomin Brands
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Good and Bloomin is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Good Times Restaurants and Bloomin Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloomin Brands and Good Times 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 Good Times Restaurants are associated (or correlated) with Bloomin Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloomin Brands has no effect on the direction of Good Times i.e., Good Times and Bloomin Brands go up and down completely randomly.
Pair Corralation between Good Times and Bloomin Brands
Given the investment horizon of 90 days Good Times Restaurants is expected to generate 1.29 times more return on investment than Bloomin Brands. However, Good Times is 1.29 times more volatile than Bloomin Brands. It trades about 0.02 of its potential returns per unit of risk. Bloomin Brands is currently generating about -0.02 per unit of risk. If you would invest 248.00 in Good Times Restaurants on August 27, 2024 and sell it today you would earn a total of 16.00 from holding Good Times Restaurants or generate 6.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Good Times Restaurants vs. Bloomin Brands
Performance |
| Timeline |
| Good Times Restaurants |
| Bloomin Brands |
Good Times and Bloomin Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Good Times and Bloomin Brands
The main advantage of trading using opposite Good Times and Bloomin Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Good Times position performs unexpectedly, Bloomin Brands 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 Bloomin Brands will offset losses from the drop in Bloomin Brands' long position.| Good Times vs. Nathans Famous | Good Times vs. FAT Brands | Good Times vs. El Pollo Loco | Good Times vs. Ark Restaurants Corp |
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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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