Correlation Between BJs Restaurants and Above Food
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Above Food 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 Above Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Above Food Ingredients, you can compare the effects of market volatilities on BJs Restaurants and Above Food 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 Above Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Above Food.
Diversification Opportunities for BJs Restaurants and Above Food
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between BJs and Above is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Above Food Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Above Food Ingredients 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 Above Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Above Food Ingredients has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Above Food go up and down completely randomly.
Pair Corralation between BJs Restaurants and Above Food
Given the investment horizon of 90 days BJs Restaurants is expected to generate 23.51 times less return on investment than Above Food. But when comparing it to its historical volatility, BJs Restaurants is 8.61 times less risky than Above Food. It trades about 0.03 of its potential returns per unit of risk. Above Food Ingredients is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5.50 in Above Food Ingredients on September 13, 2024 and sell it today you would lose (3.48) from holding Above Food Ingredients or give up 63.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 93.6% |
| Values | Daily Returns |
BJs Restaurants vs. Above Food Ingredients
Performance |
| Timeline |
| BJs Restaurants |
| Above Food Ingredients |
BJs Restaurants and Above Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Above Food
The main advantage of trading using opposite BJs Restaurants and Above Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Above Food 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 Above Food will offset losses from the drop in Above Food's long position.The idea behind BJs Restaurants and Above Food Ingredients 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.| Above Food vs. Logan Ridge Finance | Above Food vs. 51Talk Online Education | Above Food vs. Artisan Partners Asset | Above Food vs. Bank of New |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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