Correlation Between BJs Restaurants and Fomento Economico
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Fomento Economico 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 Fomento Economico into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Fomento Economico Mexicano, you can compare the effects of market volatilities on BJs Restaurants and Fomento Economico 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 Fomento Economico. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Fomento Economico.
Diversification Opportunities for BJs Restaurants and Fomento Economico
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BJs and Fomento is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Fomento Economico Mexicano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fomento Economico 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 Fomento Economico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fomento Economico has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Fomento Economico go up and down completely randomly.
Pair Corralation between BJs Restaurants and Fomento Economico
Given the investment horizon of 90 days BJs Restaurants is expected to generate 1.66 times more return on investment than Fomento Economico. However, BJs Restaurants is 1.66 times more volatile than Fomento Economico Mexicano. It trades about 0.03 of its potential returns per unit of risk. Fomento Economico Mexicano is currently generating about 0.03 per unit of risk. If you would invest 2,681 in BJs Restaurants on September 19, 2024 and sell it today you would earn a total of 806.00 from holding BJs Restaurants or generate 30.06% 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. Fomento Economico Mexicano
Performance |
| Timeline |
| BJs Restaurants |
| Fomento Economico |
BJs Restaurants and Fomento Economico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Fomento Economico
The main advantage of trading using opposite BJs Restaurants and Fomento Economico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Fomento Economico 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 Fomento Economico will offset losses from the drop in Fomento Economico's long position.| BJs Restaurants vs. Dine Brands Global | BJs Restaurants vs. Brinker International | BJs Restaurants vs. Bloomin Brands | BJs Restaurants vs. The Cheesecake Factory |
| Fomento Economico vs. Ambev SA ADR | Fomento Economico vs. Boston Beer | Fomento Economico vs. Carlsberg AS | Fomento Economico vs. Molson Coors Brewing |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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