Correlation Between BROOKDALE and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both BROOKDALE 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 BROOKDALE and BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BROOKDALE SR LIVING and BJs Restaurants, you can compare the effects of market volatilities on BROOKDALE 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 BROOKDALE with a short position of BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of BROOKDALE and BJs Restaurants.
Diversification Opportunities for BROOKDALE and BJs Restaurants
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BROOKDALE and BJs is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding BROOKDALE SR LIVING and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and BROOKDALE 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 BROOKDALE SR LIVING 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 BROOKDALE i.e., BROOKDALE and BJs Restaurants go up and down completely randomly.
Pair Corralation between BROOKDALE and BJs Restaurants
Assuming the 90 days trading horizon BROOKDALE SR LIVING is expected to under-perform the BJs Restaurants. But the stock apears to be less risky and, when comparing its historical volatility, BROOKDALE SR LIVING is 1.25 times less risky than BJs Restaurants. The stock trades about -0.11 of its potential returns per unit of risk. The BJs Restaurants is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,340 in BJs Restaurants on October 24, 2024 and sell it today you would earn a total of 40.00 from holding BJs Restaurants or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
BROOKDALE SR LIVING vs. BJs Restaurants
Performance |
| Timeline |
| BROOKDALE SR LIVING |
| BJs Restaurants |
BROOKDALE and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BROOKDALE and BJs Restaurants
The main advantage of trading using opposite BROOKDALE and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BROOKDALE 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.| BROOKDALE vs. TRI CHEMICAL LABORATINC | BROOKDALE vs. NIGHTINGALE HEALTH EO | BROOKDALE vs. Universal Health Realty | BROOKDALE vs. Natural Health Trends |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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