Correlation Between Brinker International and Portillos

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

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

Diversification Opportunities for Brinker International and Portillos

-0.7

Correlation Coefficient

Brinker International  Portillos

Excellent diversification

The 3 months correlation between Brinker and Portillos is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Brinker International and Portillos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portillos 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 Portillos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portillos has no effect on the direction of Brinker International i.e., Brinker International and Portillos go up and down completely randomly.

Pair Corralation between Brinker International and Portillos

Considering the 90-day investment horizon Brinker International is expected to generate 0.97 times more return on investment than Portillos. However, Brinker International is 1.03 times less risky than Portillos. It trades about 0.42 of its potential returns per unit of risk. Portillos is currently generating about -0.12 per unit of risk. If you would invest  6,929  in Brinker International on September 12, 2024 and sell it today you would earn a total of  6,045  from holding Brinker International or generate 87.24% return on investment over 90 days.

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

Brinker International  vs.  Portillos

Brinker International

Risk-Adjusted Performance

33 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Brinker International are ranked lower than 33 (%) 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.

Portillos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Portillos 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 essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Brinker International and Portillos

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

The idea behind Brinker International and Portillos 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.