Correlation Between Cannae Holdings and Brinker International

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

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

Diversification Opportunities for Cannae Holdings and Brinker International

0.81

Correlation Coefficient

Cannae Holdings  Brinker International

Very poor diversification

The 3 months correlation between Cannae and Brinker is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Cannae Holdings and Brinker International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinker International and Cannae Holdings 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 Cannae Holdings 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 Cannae Holdings i.e., Cannae Holdings and Brinker International go up and down completely randomly.

Pair Corralation between Cannae Holdings and Brinker International

Given the investment horizon of 90 days Cannae Holdings is expected to under-perform the Brinker International. But the stock apears to be less risky and, when comparing its historical volatility, Cannae Holdings is 1.35 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  3,698  in Brinker International on October 3, 2024 and sell it today you would earn a total of  9,531  from holding Brinker International or generate 257.73% return on investment over 90 days.

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

Cannae Holdings  vs.  Brinker International

Cannae Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cannae Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Cannae Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Brinker International

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Brinker International are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Brinker International unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cannae Holdings and Brinker International

The main advantage of trading using opposite Cannae Holdings and Brinker International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cannae Holdings 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 Cannae Holdings 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.