Correlation Between Starbucks and Brinker International
Can any of the company-specific risk be diversified away by investing in both Starbucks 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 Starbucks and Brinker International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Starbucks and Brinker International, you can compare the effects of market volatilities on Starbucks 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 Starbucks with a short position of Brinker International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starbucks and Brinker International.
Diversification Opportunities for Starbucks and Brinker International
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Starbucks and Brinker is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks and Brinker International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinker International and Starbucks 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 Starbucks 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 Starbucks i.e., Starbucks and Brinker International go up and down completely randomly.
Pair Corralation between Starbucks and Brinker International
Given the investment horizon of 90 days Starbucks is expected to under-perform the Brinker International. But the stock apears to be less risky and, when comparing its historical volatility, Starbucks is 2.83 times less risky than Brinker International. The stock trades about -0.15 of its potential returns per unit of risk. The Brinker International is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 4,608 in Brinker International on January 24, 2024 and sell it today you would earn a total of 13.00 from holding Brinker International or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Starbucks vs. Brinker International
Performance |
| Timeline |
| Starbucks |
| Brinker International |
Starbucks and Brinker International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Starbucks and Brinker International
The main advantage of trading using opposite Starbucks and Brinker International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starbucks 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.| Starbucks vs. Chipotle Mexican Grill | Starbucks vs. Dominos Pizza | Starbucks vs. Yum Brands | Starbucks vs. The Wendys Co |
| Brinker International vs. Dennys Corp | Brinker International vs. Bloomin Brands | Brinker International vs. Chuys Holdings | Brinker International vs. Jack In The |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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