Correlation Between Apple and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and BJs Restaurants, you can compare the effects of market volatilities on Apple 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 Apple with a short position of BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and BJs Restaurants.
Diversification Opportunities for Apple and BJs Restaurants
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Apple and BJs is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and Apple 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 Apple Inc 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 Apple i.e., Apple and BJs Restaurants go up and down completely randomly.
Pair Corralation between Apple and BJs Restaurants
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.54 times more return on investment than BJs Restaurants. However, Apple Inc is 1.85 times less risky than BJs Restaurants. It trades about 0.07 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.02 per unit of risk. If you would invest 14,372 in Apple Inc on November 6, 2024 and sell it today you would earn a total of 7,693 from holding Apple Inc or generate 53.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. BJs Restaurants
Performance |
| Timeline |
| Apple Inc |
| BJs Restaurants |
Apple and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and BJs Restaurants
The main advantage of trading using opposite Apple and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. Lifeway Foods | Apple vs. Discover Financial Services | Apple vs. CAL MAINE FOODS | Apple vs. Austevoll Seafood ASA |
| BJs Restaurants vs. SLR Investment Corp | BJs Restaurants vs. CDL INVESTMENT | BJs Restaurants vs. DEVRY EDUCATION GRP | 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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