Correlation Between Carnival Plc and Bloomin Brands

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

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

Diversification Opportunities for Carnival Plc and Bloomin Brands

-0.77

Correlation Coefficient

Carnival Plc  Bloomin Brands

Pay attention - limited upside

The 3 months correlation between Carnival and Bloomin is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Carnival Plc ADS and Bloomin Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloomin Brands and Carnival Plc 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 Carnival Plc ADS are associated (or correlated) with Bloomin Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloomin Brands has no effect on the direction of Carnival Plc i.e., Carnival Plc and Bloomin Brands go up and down completely randomly.

Pair Corralation between Carnival Plc and Bloomin Brands

Considering the 90-day investment horizon Carnival Plc ADS is expected to generate 0.59 times more return on investment than Bloomin Brands. However, Carnival Plc ADS is 1.69 times less risky than Bloomin Brands. It trades about 0.15 of its potential returns per unit of risk. Bloomin Brands is currently generating about -0.1 per unit of risk. If you would invest  1,909  in Carnival Plc ADS on October 24, 2024 and sell it today you would earn a total of  386.50  from holding Carnival Plc ADS or generate 20.25% return on investment over 90 days.

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

Carnival Plc ADS  vs.  Bloomin Brands

Carnival Plc ADS

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carnival Plc ADS are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Carnival Plc disclosed solid returns over the last few months and may actually be approaching a breakup point.

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

Pair Trading with Carnival Plc and Bloomin Brands

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

The idea behind Carnival Plc ADS and Bloomin Brands 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.