Correlation Between Brinker International and El Pollo
Can any of the company-specific risk be diversified away by investing in both Brinker International and El Pollo 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 El Pollo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brinker International and El Pollo Loco, you can compare the effects of market volatilities on Brinker International and El Pollo 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 El Pollo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brinker International and El Pollo.
Diversification Opportunities for Brinker International and El Pollo
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Brinker and LOCO is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Brinker International and El Pollo Loco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Pollo Loco 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 El Pollo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Pollo Loco has no effect on the direction of Brinker International i.e., Brinker International and El Pollo go up and down completely randomly.
Pair Corralation between Brinker International and El Pollo
Considering the 90-day investment horizon Brinker International is expected to under-perform the El Pollo. In addition to that, Brinker International is 2.03 times more volatile than El Pollo Loco. It trades about -0.12 of its total potential returns per unit of risk. El Pollo Loco is currently generating about -0.13 per unit of volatility. If you would invest 1,187 in El Pollo Loco on December 2, 2024 and sell it today you would lose (59.00) from holding El Pollo Loco or give up 4.97% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Brinker International vs. El Pollo Loco
Performance |
Timeline |
Brinker International |
El Pollo Loco |
Brinker International and El Pollo Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Brinker International and El Pollo
The main advantage of trading using opposite Brinker International and El Pollo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brinker International position performs unexpectedly, El Pollo 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 El Pollo will offset losses from the drop in El Pollo's long position.Brinker International vs. Dennys Corp | Brinker International vs. Bloomin Brands | Brinker International vs. Jack In The | Brinker International vs. Dine Brands Global |
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Check out your portfolio center.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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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