Correlation Between Allegheny Technologies and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both Allegheny Technologies 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 Allegheny Technologies and BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allegheny Technologies Incorporated and BJs Restaurants, you can compare the effects of market volatilities on Allegheny Technologies 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 Allegheny Technologies with a short position of BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegheny Technologies and BJs Restaurants.
Diversification Opportunities for Allegheny Technologies and BJs Restaurants
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Allegheny and BJs is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and Allegheny Technologies 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 Allegheny Technologies Incorporated 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 Allegheny Technologies i.e., Allegheny Technologies and BJs Restaurants go up and down completely randomly.
Pair Corralation between Allegheny Technologies and BJs Restaurants
Considering the 90-day investment horizon Allegheny Technologies Incorporated is expected to generate 0.89 times more return on investment than BJs Restaurants. However, Allegheny Technologies Incorporated is 1.12 times less risky than BJs Restaurants. It trades about 0.04 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.03 per unit of risk. If you would invest 4,197 in Allegheny Technologies Incorporated on November 27, 2024 and sell it today you would earn a total of 1,453 from holding Allegheny Technologies Incorporated or generate 34.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Allegheny Technologies Incorpo vs. BJs Restaurants
Performance |
| Timeline |
| Allegheny Technologies |
| BJs Restaurants |
Allegheny Technologies and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegheny Technologies and BJs Restaurants
The main advantage of trading using opposite Allegheny Technologies and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies 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.| Allegheny Technologies vs. Worthington Industries | Allegheny Technologies vs. ESAB Corp | Allegheny Technologies vs. Insteel Industries | Allegheny Technologies vs. Northwest Pipe |
| BJs Restaurants vs. Chipotle Mexican Grill | BJs Restaurants vs. Dominos Pizza Common | BJs Restaurants vs. Yum Brands | BJs Restaurants vs. The Wendys Co |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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