Correlation Between Brinker International and Mullen Automotive
Can any of the company-specific risk be diversified away by investing in both Brinker International and Mullen Automotive 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 Mullen Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brinker International and Mullen Automotive, you can compare the effects of market volatilities on Brinker International and Mullen Automotive 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 Mullen Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brinker International and Mullen Automotive.
Diversification Opportunities for Brinker International and Mullen Automotive
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Brinker and Mullen is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Brinker International and Mullen Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mullen Automotive 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 Mullen Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mullen Automotive has no effect on the direction of Brinker International i.e., Brinker International and Mullen Automotive go up and down completely randomly.
Pair Corralation between Brinker International and Mullen Automotive
Considering the 90-day investment horizon Brinker International is expected to generate 0.18 times more return on investment than Mullen Automotive. However, Brinker International is 5.55 times less risky than Mullen Automotive. It trades about 0.4 of its potential returns per unit of risk. Mullen Automotive is currently generating about -0.17 per unit of risk. If you would invest 7,226 in Brinker International on September 14, 2024 and sell it today you would earn a total of 5,748 from holding Brinker International or generate 79.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Brinker International vs. Mullen Automotive
Performance |
Timeline |
Brinker International |
Mullen Automotive |
Brinker International and Mullen Automotive Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Brinker International and Mullen Automotive
The main advantage of trading using opposite Brinker International and Mullen Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brinker International position performs unexpectedly, Mullen Automotive 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 Mullen Automotive will offset losses from the drop in Mullen Automotive's long position.Brinker International vs. Good Times Restaurants | Brinker International vs. Auburn National Bancorporation |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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