Correlation Between Yellow Pages and Brinker International

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Can any of the company-specific risk be diversified away by investing in both Yellow Pages 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 Yellow Pages and Brinker International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yellow Pages Limited and Brinker International, you can compare the effects of market volatilities on Yellow Pages 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 Yellow Pages with a short position of Brinker International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yellow Pages and Brinker International.

Diversification Opportunities for Yellow Pages and Brinker International

YellowBrinkerDiversified AwayYellowBrinkerDiversified Away100%
-0.36
  Correlation Coefficient

Very good diversification

The 3 months correlation between Yellow and Brinker is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Yellow Pages Limited and Brinker International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinker International and Yellow Pages 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 Yellow Pages Limited 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 Yellow Pages i.e., Yellow Pages and Brinker International go up and down completely randomly.

Pair Corralation between Yellow Pages and Brinker International

Assuming the 90 days horizon Yellow Pages Limited is expected to generate 0.42 times more return on investment than Brinker International. However, Yellow Pages Limited is 2.37 times less risky than Brinker International. It trades about 0.03 of its potential returns per unit of risk. Brinker International is currently generating about -0.05 per unit of risk. If you would invest  714.00  in Yellow Pages Limited on November 30, 2024 and sell it today you would earn a total of  6.00  from holding Yellow Pages Limited or generate 0.84% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

Yellow Pages Limited  vs.  Brinker International

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-1001020
JavaScript chart by amCharts 3.21.15YMI BKJ
       Timeline  
Yellow Pages Limited 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Over the last 90 days Yellow Pages Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Yellow Pages is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb6.977.17.27.37.47.57.67.7
Brinker International 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Brinker International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Brinker International reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb120130140150160170180

Yellow Pages and Brinker International Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.23-4.67-3.1-1.540.01.543.134.736.327.91 0.020.040.060.080.10
JavaScript chart by amCharts 3.21.15YMI BKJ
       Returns  

Pair Trading with Yellow Pages and Brinker International

The main advantage of trading using opposite Yellow Pages and Brinker International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yellow Pages 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.
The idea behind Yellow Pages Limited and Brinker International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Stocks Directory module to find actively traded stocks across global markets.

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