Correlation Between Brinker International and FIRST NATIONAL

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

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

Diversification Opportunities for Brinker International and FIRST NATIONAL

0.85

Correlation Coefficient

Brinker International  FIRST NATIONAL

Very poor diversification

The 3 months correlation between Brinker and FIRST is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Brinker International and FIRST NATIONAL FIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST NATIONAL FIN and Brinker International 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 Brinker International are associated (or correlated) with FIRST NATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST NATIONAL FIN has no effect on the direction of Brinker International i.e., Brinker International and FIRST NATIONAL go up and down completely randomly.

Pair Corralation between Brinker International and FIRST NATIONAL

Assuming the 90 days horizon Brinker International is expected to generate 1.39 times more return on investment than FIRST NATIONAL. However, Brinker International is 1.39 times more volatile than FIRST NATIONAL FIN. It trades about 0.13 of its potential returns per unit of risk. FIRST NATIONAL FIN is currently generating about -0.22 per unit of risk. If you would invest  11,800  in Brinker International on September 23, 2024 and sell it today you would earn a total of  900.00  from holding Brinker International or generate 7.63% return on investment over 90 days.

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

Brinker International  vs.  FIRST NATIONAL FIN

Brinker International

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brinker International are ranked lower than 24 (%) 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.

FIRST NATIONAL FIN

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FIRST NATIONAL FIN are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FIRST NATIONAL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Brinker International and FIRST NATIONAL

The main advantage of trading using opposite Brinker International and FIRST NATIONAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brinker International position performs unexpectedly, FIRST NATIONAL 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 FIRST NATIONAL will offset losses from the drop in FIRST NATIONAL's long position.

The idea behind Brinker International and FIRST NATIONAL FIN 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.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.