Correlation Between VARIOUS EATERIES and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both VARIOUS EATERIES 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 VARIOUS EATERIES and BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VARIOUS EATERIES LS and BJs Restaurants, you can compare the effects of market volatilities on VARIOUS EATERIES 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 VARIOUS EATERIES with a short position of BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of VARIOUS EATERIES and BJs Restaurants.
Diversification Opportunities for VARIOUS EATERIES and BJs Restaurants
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VARIOUS and BJs is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding VARIOUS EATERIES LS and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and VARIOUS EATERIES 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 VARIOUS EATERIES 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 VARIOUS EATERIES i.e., VARIOUS EATERIES and BJs Restaurants go up and down completely randomly.
Pair Corralation between VARIOUS EATERIES and BJs Restaurants
Assuming the 90 days horizon VARIOUS EATERIES LS is expected to under-perform the BJs Restaurants. But the stock apears to be less risky and, when comparing its historical volatility, VARIOUS EATERIES LS is 1.73 times less risky than BJs Restaurants. The stock trades about -0.06 of its potential returns per unit of risk. The BJs Restaurants is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,260 in BJs Restaurants on August 25, 2024 and sell it today you would earn a total of 0.00 from holding BJs Restaurants or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VARIOUS EATERIES LS vs. BJs Restaurants
Performance |
| Timeline |
| VARIOUS EATERIES |
| BJs Restaurants |
VARIOUS EATERIES and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VARIOUS EATERIES and BJs Restaurants
The main advantage of trading using opposite VARIOUS EATERIES and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VARIOUS EATERIES 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.| VARIOUS EATERIES vs. Superior Plus Corp | VARIOUS EATERIES vs. NMI Holdings | VARIOUS EATERIES vs. Origin Agritech | VARIOUS EATERIES vs. SIVERS SEMICONDUCTORS AB |
| BJs Restaurants vs. Gladstone Investment | BJs Restaurants vs. Strategic Investments AS | BJs Restaurants vs. CDN IMPERIAL BANK | BJs Restaurants vs. HK Electric Investments |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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