Correlation Between Alfa Financial and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both Alfa Financial 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 Alfa Financial and BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alfa Financial Software and BJs Restaurants, you can compare the effects of market volatilities on Alfa Financial 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 Alfa Financial with a short position of BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and BJs Restaurants.
Diversification Opportunities for Alfa Financial and BJs Restaurants
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alfa and BJs is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and Alfa Financial 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 Alfa Financial Software 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 Alfa Financial i.e., Alfa Financial and BJs Restaurants go up and down completely randomly.
Pair Corralation between Alfa Financial and BJs Restaurants
Assuming the 90 days trading horizon Alfa Financial is expected to generate 1.35 times less return on investment than BJs Restaurants. But when comparing it to its historical volatility, Alfa Financial Software is 1.2 times less risky than BJs Restaurants. It trades about 0.15 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,760 in BJs Restaurants on August 31, 2024 and sell it today you would earn a total of 820.00 from holding BJs Restaurants or generate 29.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Financial Software vs. BJs Restaurants
Performance |
| Timeline |
| Alfa Financial Software |
| BJs Restaurants |
Alfa Financial and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Financial and BJs Restaurants
The main advantage of trading using opposite Alfa Financial and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial 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.| Alfa Financial vs. Texas Roadhouse | Alfa Financial vs. G III Apparel Group | Alfa Financial vs. Transport International Holdings | Alfa Financial vs. GOLD ROAD RES |
| BJs Restaurants vs. Kaiser Aluminum | BJs Restaurants vs. Infrastrutture Wireless Italiane | BJs Restaurants vs. AAC TECHNOLOGHLDGADR | BJs Restaurants vs. SIMS METAL MGT |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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