Correlation Between Grupo Carso and Brinker International

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

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

Diversification Opportunities for Grupo Carso and Brinker International

0.42

Correlation Coefficient

Grupo Carso  Brinker International

Very weak diversification

The 3 months correlation between Grupo and Brinker is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Carso SAB and Brinker International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinker International and Grupo Carso 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 Grupo Carso SAB 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 Grupo Carso i.e., Grupo Carso and Brinker International go up and down completely randomly.

Pair Corralation between Grupo Carso and Brinker International

Assuming the 90 days horizon Grupo Carso is expected to generate 4.55 times less return on investment than Brinker International. But when comparing it to its historical volatility, Grupo Carso SAB is 1.98 times less risky than Brinker International. It trades about 0.01 of its potential returns per unit of risk. Brinker International is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  12,700  in Brinker International on December 20, 2024 and sell it today you would earn a total of  100.00  from holding Brinker International or generate 0.79% return on investment over 90 days.

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

Grupo Carso SAB  vs.  Brinker International

Grupo Carso SAB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grupo Carso SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Grupo Carso is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Brinker International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brinker International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Brinker International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Grupo Carso and Brinker International

The main advantage of trading using opposite Grupo Carso and Brinker International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Carso 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 Grupo Carso SAB 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.