Correlation Between BJs Restaurants and ARCA Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and ARCA Pharmaceutical 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 ARCA Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and ARCA Pharmaceutical, you can compare the effects of market volatilities on BJs Restaurants and ARCA Pharmaceutical 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 ARCA Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and ARCA Pharmaceutical.
Diversification Opportunities for BJs Restaurants and ARCA Pharmaceutical
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BJs and ARCA is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and ARCA Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARCA Pharmaceutical 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 ARCA Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARCA Pharmaceutical has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and ARCA Pharmaceutical go up and down completely randomly.
Pair Corralation between BJs Restaurants and ARCA Pharmaceutical
Given the investment horizon of 90 days BJs Restaurants is expected to generate 3.21 times more return on investment than ARCA Pharmaceutical. However, BJs Restaurants is 3.21 times more volatile than ARCA Pharmaceutical. It trades about 0.03 of its potential returns per unit of risk. ARCA Pharmaceutical is currently generating about 0.03 per unit of risk. If you would invest 2,775 in BJs Restaurants on September 13, 2024 and sell it today you would earn a total of 807.00 from holding BJs Restaurants or generate 29.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. ARCA Pharmaceutical
Performance |
| Timeline |
BJs Restaurants and ARCA Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
BJs Restaurants
Pair trading matchups for BJs Restaurants
ARCA Pharmaceutical
Pair trading matchups for ARCA Pharmaceutical
Pair Trading with BJs Restaurants and ARCA Pharmaceutical
The main advantage of trading using opposite BJs Restaurants and ARCA Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, ARCA Pharmaceutical 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 ARCA Pharmaceutical will offset losses from the drop in ARCA Pharmaceutical's long position.The idea behind BJs Restaurants and ARCA Pharmaceutical pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ARCA Pharmaceutical vs. Ispire Technology Common | ARCA Pharmaceutical vs. Paltalk | ARCA Pharmaceutical vs. Boston Beer | ARCA Pharmaceutical vs. Keurig Dr Pepper |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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