Correlation Between AeroVironment and Brinker International

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

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

Diversification Opportunities for AeroVironment and Brinker International

0.0

Correlation Coefficient

AeroVironment  Brinker International

Pay attention - limited upside

The 3 months correlation between AeroVironment and Brinker is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AeroVironment and Brinker International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinker International and AeroVironment 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 AeroVironment are associated (or correlated) with Brinker International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brinker International has no effect on the direction of AeroVironment i.e., AeroVironment and Brinker International go up and down completely randomly.

Pair Corralation between AeroVironment and Brinker International

If you would invest (100.00) in Brinker International on October 8, 2024 and sell it today you would earn a total of  100.00  from holding Brinker International or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

AeroVironment  vs.  Brinker International

AeroVironment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AeroVironment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Brinker International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brinker International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Brinker International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AeroVironment and Brinker International

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

The idea behind AeroVironment and Brinker International 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 Global Correlations module to find global opportunities by holding instruments from different markets.