Correlation Between Genel Energy and Brinker International
Can any of the company-specific risk be diversified away by investing in both Genel Energy 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 Genel Energy and Brinker International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genel Energy plc and Brinker International, you can compare the effects of market volatilities on Genel Energy 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 Genel Energy with a short position of Brinker International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genel Energy and Brinker International.
Diversification Opportunities for Genel Energy and Brinker International
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Genel and Brinker is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Genel Energy plc and Brinker International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinker International and Genel Energy 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 Genel Energy plc 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 Genel Energy i.e., Genel Energy and Brinker International go up and down completely randomly.
Pair Corralation between Genel Energy and Brinker International
Assuming the 90 days horizon Genel Energy is expected to generate 5.8 times less return on investment than Brinker International. In addition to that, Genel Energy is 1.35 times more volatile than Brinker International. It trades about 0.06 of its total potential returns per unit of risk. Brinker International is currently generating about 0.45 per unit of volatility. If you would invest 9,076 in Brinker International on August 17, 2024 and sell it today you would earn a total of 2,669 from holding Brinker International or generate 29.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 95.65% |
Values | Daily Returns |
Genel Energy plc vs. Brinker International
Performance |
Timeline |
Genel Energy plc |
Brinker International |
Genel Energy and Brinker International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Genel Energy and Brinker International
The main advantage of trading using opposite Genel Energy and Brinker International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genel Energy 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.Genel Energy vs. Diamondback Energy | Genel Energy vs. Arbor Metals Corp | Genel Energy vs. Jones Lang LaSalle | Genel Energy vs. First United |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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