Correlation Between BJs Restaurants and Arrow Financial
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Arrow 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 Arrow 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 Arrow Financial, you can compare the effects of market volatilities on BJs Restaurants and Arrow 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 Arrow Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Arrow Financial.
Diversification Opportunities for BJs Restaurants and Arrow Financial
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BJs and Arrow is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Arrow Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow 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 Arrow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Financial has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Arrow Financial go up and down completely randomly.
Pair Corralation between BJs Restaurants and Arrow Financial
Given the investment horizon of 90 days BJs Restaurants is expected to generate 2.36 times more return on investment than Arrow Financial. However, BJs Restaurants is 2.36 times more volatile than Arrow Financial. It trades about 0.09 of its potential returns per unit of risk. Arrow Financial is currently generating about -0.37 per unit of risk. If you would invest 3,522 in BJs Restaurants on September 12, 2024 and sell it today you would earn a total of 148.00 from holding BJs Restaurants or generate 4.2% 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. Arrow Financial
Performance |
| Timeline |
| BJs Restaurants |
| Arrow Financial |
BJs Restaurants and Arrow Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Arrow Financial
The main advantage of trading using opposite BJs Restaurants and Arrow Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Arrow 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 Arrow Financial will offset losses from the drop in Arrow Financial's long position.| BJs Restaurants vs. Noble Romans | BJs Restaurants vs. Good Times Restaurants | BJs Restaurants vs. Flanigans Enterprises | BJs Restaurants vs. FAT Brands |
| Arrow Financial vs. Heritage Commerce Corp | Arrow Financial vs. Westamerica Bancorporation | Arrow Financial vs. Heritage Financial | Arrow Financial vs. National Bankshares |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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