Correlation Between Gladstone Investment and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both Gladstone Investment and BJs Restaurants 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 Gladstone Investment and BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gladstone Investment and BJs Restaurants, you can compare the effects of market volatilities on Gladstone Investment and BJs Restaurants 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 Gladstone Investment with a short position of BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and BJs Restaurants.
Diversification Opportunities for Gladstone Investment and BJs Restaurants
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Gladstone and BJs is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and Gladstone Investment 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 Gladstone Investment are associated (or correlated) with BJs Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Restaurants has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and BJs Restaurants go up and down completely randomly.
Pair Corralation between Gladstone Investment and BJs Restaurants
Assuming the 90 days horizon Gladstone Investment is expected to generate 0.57 times more return on investment than BJs Restaurants. However, Gladstone Investment is 1.75 times less risky than BJs Restaurants. It trades about 0.06 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.03 per unit of risk. If you would invest 922.00 in Gladstone Investment on August 29, 2024 and sell it today you would earn a total of 348.00 from holding Gladstone Investment or generate 37.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gladstone Investment vs. BJs Restaurants
Performance |
| Timeline |
| Gladstone Investment |
| BJs Restaurants |
Gladstone Investment and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Investment and BJs Restaurants
The main advantage of trading using opposite Gladstone Investment and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment position performs unexpectedly, BJs Restaurants 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 BJs Restaurants will offset losses from the drop in BJs Restaurants' long position.| Gladstone Investment vs. Lyxor 1 | Gladstone Investment vs. Xtrackers LevDAX | Gladstone Investment vs. Xtrackers ShortDAX |
| BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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