Correlation Between KIMBALL ELECTRONICS and Brinker International

Can any of the company-specific risk be diversified away by investing in both KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS and Brinker International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KIMBALL ELECTRONICS and Brinker International, you can compare the effects of market volatilities on KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS with a short position of Brinker International. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIMBALL ELECTRONICS and Brinker International.

Diversification Opportunities for KIMBALL ELECTRONICS and Brinker International

0.82

Correlation Coefficient

KIMBALL ELECTRONICS  Brinker International

Very poor diversification

The 3 months correlation between KIMBALL and Brinker is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding KIMBALL ELECTRONICS and Brinker International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinker International and KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS i.e., KIMBALL ELECTRONICS and Brinker International go up and down completely randomly.

Pair Corralation between KIMBALL ELECTRONICS and Brinker International

Assuming the 90 days horizon KIMBALL ELECTRONICS is expected to under-perform the Brinker International. But the stock apears to be less risky and, when comparing its historical volatility, KIMBALL ELECTRONICS is 1.11 times less risky than Brinker International. The stock trades about -0.01 of its potential returns per unit of risk. The Brinker International is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,980  in Brinker International on September 24, 2024 and sell it today you would earn a total of  9,720  from holding Brinker International or generate 326.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

KIMBALL ELECTRONICS  vs.  Brinker International

KIMBALL ELECTRONICS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KIMBALL ELECTRONICS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, KIMBALL ELECTRONICS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Brinker International

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brinker International are ranked lower than 25 (%) 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.

Pair Trading with KIMBALL ELECTRONICS and Brinker International

The main advantage of trading using opposite KIMBALL ELECTRONICS and Brinker International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..