Correlation Between Arm Holdings and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both Arm Holdings 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 Arm Holdings and BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arm Holdings plc and BJs Restaurants, you can compare the effects of market volatilities on Arm Holdings 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 Arm Holdings with a short position of BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arm Holdings and BJs Restaurants.
Diversification Opportunities for Arm Holdings and BJs Restaurants
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Arm and BJs is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Arm Holdings plc and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and Arm Holdings 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 Arm Holdings plc 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 Arm Holdings i.e., Arm Holdings and BJs Restaurants go up and down completely randomly.
Pair Corralation between Arm Holdings and BJs Restaurants
Considering the 90-day investment horizon Arm Holdings plc is expected to generate 3.24 times more return on investment than BJs Restaurants. However, Arm Holdings is 3.24 times more volatile than BJs Restaurants. It trades about 0.21 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.03 per unit of risk. If you would invest 12,820 in Arm Holdings plc on November 3, 2024 and sell it today you would earn a total of 3,135 from holding Arm Holdings plc or generate 24.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arm Holdings plc vs. BJs Restaurants
Performance |
| Timeline |
| Arm Holdings plc |
| BJs Restaurants |
Arm Holdings and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arm Holdings and BJs Restaurants
The main advantage of trading using opposite Arm Holdings and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arm Holdings 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.| Arm Holdings vs. Sonos Inc | Arm Holdings vs. United Parks Resorts | Arm Holdings vs. Mattel Inc | Arm Holdings vs. U Haul Holding |
| BJs Restaurants vs. Dine Brands Global | BJs Restaurants vs. Brinker International | BJs Restaurants vs. Bloomin Brands | BJs Restaurants vs. The Cheesecake Factory |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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