Correlation Between Bill and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both Bill 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 Bill and BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bill Com Holdings and BJs Restaurants, you can compare the effects of market volatilities on Bill 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 Bill with a short position of BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bill and BJs Restaurants.
Diversification Opportunities for Bill and BJs Restaurants
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bill and BJs is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bill Com Holdings and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and Bill 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 Bill Com Holdings 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 Bill i.e., Bill and BJs Restaurants go up and down completely randomly.
Pair Corralation between Bill and BJs Restaurants
Given the investment horizon of 90 days Bill Com Holdings is expected to generate 1.09 times more return on investment than BJs Restaurants. However, Bill is 1.09 times more volatile than BJs Restaurants. It trades about 0.16 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.03 per unit of risk. If you would invest 5,017 in Bill Com Holdings on September 3, 2024 and sell it today you would earn a total of 3,935 from holding Bill Com Holdings or generate 78.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bill Com Holdings vs. BJs Restaurants
Performance |
| Timeline |
| Bill Com Holdings |
| BJs Restaurants |
Bill and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bill and BJs Restaurants
The main advantage of trading using opposite Bill and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bill 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.The idea behind Bill Com Holdings and BJs Restaurants pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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