Correlation Between BJs Restaurants and American Battery
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and American Battery 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 BJs Restaurants and American Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and American Battery Technology, you can compare the effects of market volatilities on BJs Restaurants and American Battery 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 BJs Restaurants with a short position of American Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and American Battery.
Diversification Opportunities for BJs Restaurants and American Battery
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BJs and American is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and American Battery Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Battery Tec and BJs Restaurants 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 BJs Restaurants are associated (or correlated) with American Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Battery Tec has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and American Battery go up and down completely randomly.
Pair Corralation between BJs Restaurants and American Battery
Given the investment horizon of 90 days BJs Restaurants is expected to generate 0.21 times more return on investment than American Battery. However, BJs Restaurants is 4.86 times less risky than American Battery. It trades about 0.14 of its potential returns per unit of risk. American Battery Technology is currently generating about -0.29 per unit of risk. If you would invest 3,524 in BJs Restaurants on November 8, 2024 and sell it today you would earn a total of 151.00 from holding BJs Restaurants or generate 4.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. American Battery Technology
Performance |
| Timeline |
| BJs Restaurants |
| American Battery Tec |
BJs Restaurants and American Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and American Battery
The main advantage of trading using opposite BJs Restaurants and American Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, American Battery 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 American Battery will offset losses from the drop in American Battery's long position.| BJs Restaurants vs. Dominos Pizza Common | BJs Restaurants vs. Yum Brands | BJs Restaurants vs. The Wendys Co | BJs Restaurants vs. Wingstop |
| American Battery vs. MOGU Inc | American Battery vs. RH | American Battery vs. Anheuser Busch Inbev | American Battery vs. Constellation Brands Class |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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