Correlation Between BJs Restaurants and Air Products
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Air Products 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 Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Air Products and, you can compare the effects of market volatilities on BJs Restaurants and Air Products 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 Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Air Products.
Diversification Opportunities for BJs Restaurants and Air Products
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BJs and Air is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products 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 Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Air Products go up and down completely randomly.
Pair Corralation between BJs Restaurants and Air Products
Given the investment horizon of 90 days BJs Restaurants is expected to generate 1.45 times more return on investment than Air Products. However, BJs Restaurants is 1.45 times more volatile than Air Products and. It trades about 0.06 of its potential returns per unit of risk. Air Products and is currently generating about 0.03 per unit of risk. If you would invest 2,387 in BJs Restaurants on September 19, 2024 and sell it today you would earn a total of 1,100 from holding BJs Restaurants or generate 46.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. Air Products and
Performance |
| Timeline |
| BJs Restaurants |
| Air Products |
BJs Restaurants and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Air Products
The main advantage of trading using opposite BJs Restaurants and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| BJs Restaurants vs. Dine Brands Global | BJs Restaurants vs. Brinker International | BJs Restaurants vs. Bloomin Brands | BJs Restaurants vs. The Cheesecake Factory |
| Air Products vs. PPG Industries | Air Products vs. Sherwin Williams Co | Air Products vs. Ecolab Inc | Air Products vs. Albemarle Corp |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |