Correlation Between Genel Energy and Brinker International

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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 Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.65%
ValuesDaily Returns

Genel Energy plc  vs.  Brinker International

 Performance 
       Timeline  
Genel Energy plc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Genel Energy plc 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 December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Brinker International 

Risk-Adjusted Performance

28 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Brinker International are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Brinker International unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.
The idea behind Genel Energy plc 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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