Correlation Between Brinker International and Deutsche Pfandbriefbank

Can any of the company-specific risk be diversified away by investing in both Brinker International and Deutsche Pfandbriefbank 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 Brinker International and Deutsche Pfandbriefbank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brinker International and Deutsche Pfandbriefbank AG, you can compare the effects of market volatilities on Brinker International and Deutsche Pfandbriefbank 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 Brinker International with a short position of Deutsche Pfandbriefbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brinker International and Deutsche Pfandbriefbank.

Diversification Opportunities for Brinker International and Deutsche Pfandbriefbank

-0.89

Correlation Coefficient

Brinker International  Deutsche Pfandbriefbank

Pay attention - limited upside

The 3 months correlation between Brinker and Deutsche is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Brinker International and Deutsche Pfandbriefbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Pfandbriefbank and Brinker International 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 Brinker International are associated (or correlated) with Deutsche Pfandbriefbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Pfandbriefbank has no effect on the direction of Brinker International i.e., Brinker International and Deutsche Pfandbriefbank go up and down completely randomly.

Pair Corralation between Brinker International and Deutsche Pfandbriefbank

Assuming the 90 days horizon Brinker International is expected to generate 1.94 times more return on investment than Deutsche Pfandbriefbank. However, Brinker International is 1.94 times more volatile than Deutsche Pfandbriefbank AG. It trades about 0.12 of its potential returns per unit of risk. Deutsche Pfandbriefbank AG is currently generating about -0.21 per unit of risk. If you would invest  11,900  in Brinker International on September 25, 2024 and sell it today you would earn a total of  800.00  from holding Brinker International or generate 6.72% return on investment over 90 days.

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

Brinker International  vs.  Deutsche Pfandbriefbank AG

Brinker International

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Brinker International are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Brinker International reported solid returns over the last few months and may actually be approaching a breakup point.

Deutsche Pfandbriefbank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deutsche Pfandbriefbank AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Brinker International and Deutsche Pfandbriefbank

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

The idea behind Brinker International and Deutsche Pfandbriefbank AG 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.