Correlation Between El Pollo and Brinker International
Can any of the company-specific risk be diversified away by investing in both El Pollo 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 El Pollo and Brinker International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between El Pollo Loco and Brinker International, you can compare the effects of market volatilities on El Pollo 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 El Pollo with a short position of Brinker International. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Pollo and Brinker International.
Diversification Opportunities for El Pollo and Brinker International
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between LOCO and Brinker is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding El Pollo Loco and Brinker International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinker International and El Pollo 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 El Pollo Loco 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 El Pollo i.e., El Pollo and Brinker International go up and down completely randomly.
Pair Corralation between El Pollo and Brinker International
Given the investment horizon of 90 days El Pollo is expected to generate 4.03 times less return on investment than Brinker International. But when comparing it to its historical volatility, El Pollo Loco is 1.66 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 0.19 of returns per unit of risk over similar time horizon. If you would invest 6,788 in Brinker International on August 24, 2024 and sell it today you would earn a total of 5,583 from holding Brinker International or generate 82.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
El Pollo Loco vs. Brinker International
Performance |
| Timeline |
| El Pollo Loco |
| Brinker International |
El Pollo and Brinker International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with El Pollo and Brinker International
The main advantage of trading using opposite El Pollo and Brinker International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Pollo 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.| El Pollo vs. FAT Brands | El Pollo vs. Potbelly Co | El Pollo vs. BJs Restaurants | El Pollo vs. One Group Hospitality |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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