Correlation Between Jack In and Brinker International
Can any of the company-specific risk be diversified away by investing in both Jack In 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 Jack In and Brinker International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jack In The and Brinker International, you can compare the effects of market volatilities on Jack In 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 Jack In with a short position of Brinker International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jack In and Brinker International.
Diversification Opportunities for Jack In and Brinker International
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Jack and Brinker is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Jack In The and Brinker International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinker International and Jack In 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 Jack In The 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 Jack In i.e., Jack In and Brinker International go up and down completely randomly.
Pair Corralation between Jack In and Brinker International
Given the investment horizon of 90 days Jack In The is expected to under-perform the Brinker International. But the stock apears to be less risky and, when comparing its historical volatility, Jack In The is 1.27 times less risky than Brinker International. The stock trades about -0.46 of its potential returns per unit of risk. The Brinker International is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 4,674 in Brinker International on January 19, 2024 and sell it today you would lose (267.00) from holding Brinker International or give up 5.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jack In The vs. Brinker International
Performance |
| Timeline |
| Jack In |
| Brinker International |
Jack In and Brinker International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jack In and Brinker International
The main advantage of trading using opposite Jack In and Brinker International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jack In 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 Jack In The 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.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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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