Correlation Between BJs Restaurants and Compass Group
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Compass Group 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 Compass Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Compass Group PLC, you can compare the effects of market volatilities on BJs Restaurants and Compass Group 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 Compass Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Compass Group.
Diversification Opportunities for BJs Restaurants and Compass Group
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BJs and Compass is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Compass Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Group PLC 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 Compass Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Group PLC has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Compass Group go up and down completely randomly.
Pair Corralation between BJs Restaurants and Compass Group
Given the investment horizon of 90 days BJs Restaurants is expected to generate 1.8 times less return on investment than Compass Group. In addition to that, BJs Restaurants is 2.86 times more volatile than Compass Group PLC. It trades about 0.04 of its total potential returns per unit of risk. Compass Group PLC is currently generating about 0.18 per unit of volatility. If you would invest 2,777 in Compass Group PLC on August 30, 2024 and sell it today you would earn a total of 695.00 from holding Compass Group PLC or generate 25.03% 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. Compass Group PLC
Performance |
| Timeline |
| BJs Restaurants |
| Compass Group PLC |
BJs Restaurants and Compass Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Compass Group
The main advantage of trading using opposite BJs Restaurants and Compass Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Compass Group 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 Compass Group will offset losses from the drop in Compass Group's long position.| BJs Restaurants vs. Chipotle Mexican Grill | BJs Restaurants vs. Yum Brands | BJs Restaurants vs. The Wendys Co | BJs Restaurants vs. McDonalds |
| Compass Group vs. McDonalds | Compass Group vs. Starbucks | Compass Group vs. Chipotle Mexican Grill | Compass Group vs. Yum Brands |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |