Correlation Between Brinker International and KVH Industries

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

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

Diversification Opportunities for Brinker International and KVH Industries

0.63

Correlation Coefficient

Brinker International  KVH Industries

Poor diversification

The 3 months correlation between Brinker and KVH is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Brinker International and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries and Brinker International 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 Brinker International are associated (or correlated) with KVH Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KVH Industries has no effect on the direction of Brinker International i.e., Brinker International and KVH Industries go up and down completely randomly.

Pair Corralation between Brinker International and KVH Industries

Considering the 90-day investment horizon Brinker International is expected to generate 1.55 times more return on investment than KVH Industries. However, Brinker International is 1.55 times more volatile than KVH Industries. It trades about 0.08 of its potential returns per unit of risk. KVH Industries is currently generating about -0.01 per unit of risk. If you would invest  13,210  in Brinker International on December 28, 2024 and sell it today you would earn a total of  2,229  from holding Brinker International or generate 16.87% return on investment over 90 days.

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

Brinker International  vs.  KVH Industries

Brinker International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brinker International are ranked lower than 6 (%) 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.

KVH Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days KVH Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, KVH Industries is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Brinker International and KVH Industries

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

The idea behind Brinker International and KVH Industries 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.