Correlation Between TRAINLINE PLC and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both TRAINLINE PLC 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 TRAINLINE PLC and BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRAINLINE PLC LS and BJs Restaurants, you can compare the effects of market volatilities on TRAINLINE PLC 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 TRAINLINE PLC with a short position of BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAINLINE PLC and BJs Restaurants.
Diversification Opportunities for TRAINLINE PLC and BJs Restaurants
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TRAINLINE and BJs is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding TRAINLINE PLC LS and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and TRAINLINE PLC 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 TRAINLINE PLC LS 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 TRAINLINE PLC i.e., TRAINLINE PLC and BJs Restaurants go up and down completely randomly.
Pair Corralation between TRAINLINE PLC and BJs Restaurants
Assuming the 90 days trading horizon TRAINLINE PLC is expected to generate 2.01 times less return on investment than BJs Restaurants. In addition to that, TRAINLINE PLC is 1.1 times more volatile than BJs Restaurants. It trades about 0.1 of its total potential returns per unit of risk. BJs Restaurants is currently generating about 0.23 per unit of volatility. If you would invest 3,140 in BJs Restaurants on September 2, 2024 and sell it today you would earn a total of 440.00 from holding BJs Restaurants or generate 14.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TRAINLINE PLC LS vs. BJs Restaurants
Performance |
| Timeline |
| TRAINLINE PLC LS |
| BJs Restaurants |
TRAINLINE PLC and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRAINLINE PLC and BJs Restaurants
The main advantage of trading using opposite TRAINLINE PLC and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAINLINE PLC 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.| TRAINLINE PLC vs. Ramsay Health Care | TRAINLINE PLC vs. North American Construction | TRAINLINE PLC vs. Granite Construction | TRAINLINE PLC vs. Titan Machinery |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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