Correlation Between BJs Restaurants and AmTrust Financial
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and AmTrust Financial 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 AmTrust Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and AmTrust Financial Services, you can compare the effects of market volatilities on BJs Restaurants and AmTrust Financial 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 AmTrust Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and AmTrust Financial.
Diversification Opportunities for BJs Restaurants and AmTrust Financial
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BJs and AmTrust is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and AmTrust Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmTrust Financial 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 AmTrust Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmTrust Financial has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and AmTrust Financial go up and down completely randomly.
Pair Corralation between BJs Restaurants and AmTrust Financial
Given the investment horizon of 90 days BJs Restaurants is expected to generate 1.92 times more return on investment than AmTrust Financial. However, BJs Restaurants is 1.92 times more volatile than AmTrust Financial Services. It trades about 0.25 of its potential returns per unit of risk. AmTrust Financial Services is currently generating about 0.07 per unit of risk. If you would invest 3,399 in BJs Restaurants on September 2, 2024 and sell it today you would earn a total of 445.00 from holding BJs Restaurants or generate 13.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. AmTrust Financial Services
Performance |
| Timeline |
| BJs Restaurants |
| AmTrust Financial |
BJs Restaurants and AmTrust Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and AmTrust Financial
The main advantage of trading using opposite BJs Restaurants and AmTrust Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, AmTrust Financial 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 AmTrust Financial will offset losses from the drop in AmTrust Financial's long position.| BJs Restaurants vs. Dine Brands Global | BJs Restaurants vs. Brinker International | BJs Restaurants vs. Bloomin Brands | BJs Restaurants vs. The Cheesecake Factory |
| AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. AmTrust Financial Services |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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