Correlation Between Bloomin Brands and Gan

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

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

Diversification Opportunities for Bloomin Brands and Gan

-0.46

Correlation Coefficient

Bloomin Brands  Gan

Very good diversification

The 3 months correlation between Bloomin and Gan is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bloomin Brands and Gan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gan and Bloomin Brands 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 Bloomin Brands are associated (or correlated) with Gan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gan has no effect on the direction of Bloomin Brands i.e., Bloomin Brands and Gan go up and down completely randomly.

Pair Corralation between Bloomin Brands and Gan

Given the investment horizon of 90 days Bloomin Brands is expected to under-perform the Gan. In addition to that, Bloomin Brands is 2.93 times more volatile than Gan. It trades about -0.07 of its total potential returns per unit of risk. Gan is currently generating about 0.09 per unit of volatility. If you would invest  173.00  in Gan on August 30, 2024 and sell it today you would earn a total of  10.00  from holding Gan or generate 5.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Bloomin Brands  vs.  Gan

Bloomin Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bloomin Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Gan

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gan are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Gan is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bloomin Brands and Gan

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

The idea behind Bloomin Brands and Gan 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.