Correlation Between Bloomin Brands and Portillos

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

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

Diversification Opportunities for Bloomin Brands and Portillos

-0.14

Correlation Coefficient

Bloomin Brands  Portillos

Good diversification

The 3 months correlation between Bloomin and Portillos is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Bloomin Brands and Portillos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portillos 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 Portillos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portillos has no effect on the direction of Bloomin Brands i.e., Bloomin Brands and Portillos go up and down completely randomly.

Pair Corralation between Bloomin Brands and Portillos

Given the investment horizon of 90 days Bloomin Brands is expected to under-perform the Portillos. In addition to that, Bloomin Brands is 1.05 times more volatile than Portillos. It trades about -0.12 of its total potential returns per unit of risk. Portillos is currently generating about 0.14 per unit of volatility. If you would invest  910.00  in Portillos on December 29, 2024 and sell it today you would earn a total of  335.00  from holding Portillos or generate 36.81% return on investment over 90 days.

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

Bloomin Brands  vs.  Portillos

Bloomin Brands

Risk-Adjusted Performance

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 unfluctuating performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Portillos

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Portillos are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Portillos displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bloomin Brands and Portillos

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

The idea behind Bloomin Brands and Portillos 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.