Correlation Between BJs Restaurants and CF Industries
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and CF Industries 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 CF Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and CF Industries Holdings, you can compare the effects of market volatilities on BJs Restaurants and CF Industries 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 CF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and CF Industries.
Diversification Opportunities for BJs Restaurants and CF Industries
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BJs and CF Industries is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and CF Industries Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Industries Holdings 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 CF Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Industries Holdings has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and CF Industries go up and down completely randomly.
Pair Corralation between BJs Restaurants and CF Industries
Given the investment horizon of 90 days BJs Restaurants is expected to generate 1.43 times more return on investment than CF Industries. However, BJs Restaurants is 1.43 times more volatile than CF Industries Holdings. It trades about 0.03 of its potential returns per unit of risk. CF Industries Holdings is currently generating about 0.02 per unit of risk. If you would invest 3,101 in BJs Restaurants on September 19, 2024 and sell it today you would earn a total of 632.00 from holding BJs Restaurants or generate 20.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. CF Industries Holdings
Performance |
| Timeline |
| BJs Restaurants |
| CF Industries Holdings |
BJs Restaurants and CF Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and CF Industries
The main advantage of trading using opposite BJs Restaurants and CF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, CF Industries 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 CF Industries will offset losses from the drop in CF Industries' long position.| BJs Restaurants vs. Dine Brands Global | BJs Restaurants vs. Brinker International | BJs Restaurants vs. Bloomin Brands | BJs Restaurants vs. The Cheesecake Factory |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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