Correlation Between Ark Restaurants and Bloomin Brands

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

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

Diversification Opportunities for Ark Restaurants and Bloomin Brands

0.76

Correlation Coefficient

Ark Restaurants  Bloomin Brands

Poor diversification

The 3 months correlation between Ark and Bloomin is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ark Restaurants Corp and Bloomin Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloomin Brands and Ark Restaurants 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 Ark Restaurants Corp are associated (or correlated) with Bloomin Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloomin Brands has no effect on the direction of Ark Restaurants i.e., Ark Restaurants and Bloomin Brands go up and down completely randomly.

Pair Corralation between Ark Restaurants and Bloomin Brands

Given the investment horizon of 90 days Ark Restaurants Corp is expected to under-perform the Bloomin Brands. But the stock apears to be less risky and, when comparing its historical volatility, Ark Restaurants Corp is 1.53 times less risky than Bloomin Brands. The stock trades about -0.14 of its potential returns per unit of risk. The Bloomin Brands is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  1,693  in Bloomin Brands on September 3, 2024 and sell it today you would lose (299.00) from holding Bloomin Brands or give up 17.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Ark Restaurants Corp  vs.  Bloomin Brands

Ark Restaurants Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ark Restaurants Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Bloomin Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bloomin Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ark Restaurants and Bloomin Brands

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

The idea behind Ark Restaurants Corp and Bloomin Brands 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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.