Correlation Between Charter Communications and Brinker International

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

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

Diversification Opportunities for Charter Communications and Brinker International

0.0

Correlation Coefficient

Charter Communications  Brinker International

Pay attention - limited upside

The 3 months correlation between Charter and Brinker is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Brinker International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinker International and Charter Communications 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 Charter Communications 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 Charter Communications i.e., Charter Communications and Brinker International go up and down completely randomly.

Pair Corralation between Charter Communications and Brinker International

If you would invest (100.00) in Brinker International on October 5, 2024 and sell it today you would earn a total of  100.00  from holding Brinker International or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Charter Communications  vs.  Brinker International

Charter Communications

Risk-Adjusted Performance

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Modest

Over the last 90 days Charter Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively fragile basic indicators, Charter Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

Brinker International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brinker International has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Charter Communications and Brinker International

The main advantage of trading using opposite Charter Communications and Brinker International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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 Charter Communications 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.