Correlation Between BJs Restaurants and HE Equipment
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and HE Equipment 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 HE Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and HE Equipment Services, you can compare the effects of market volatilities on BJs Restaurants and HE Equipment 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 HE Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and HE Equipment.
Diversification Opportunities for BJs Restaurants and HE Equipment
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BJs and HEES is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and HE Equipment Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HE Equipment Services 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 HE Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HE Equipment Services has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and HE Equipment go up and down completely randomly.
Pair Corralation between BJs Restaurants and HE Equipment
Given the investment horizon of 90 days BJs Restaurants is expected to generate 1.93 times less return on investment than HE Equipment. In addition to that, BJs Restaurants is 1.01 times more volatile than HE Equipment Services. It trades about 0.04 of its total potential returns per unit of risk. HE Equipment Services is currently generating about 0.07 per unit of volatility. If you would invest 3,328 in HE Equipment Services on August 30, 2024 and sell it today you would earn a total of 2,605 from holding HE Equipment Services or generate 78.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. HE Equipment Services
Performance |
| Timeline |
| BJs Restaurants |
| HE Equipment Services |
BJs Restaurants and HE Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and HE Equipment
The main advantage of trading using opposite BJs Restaurants and HE Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, HE Equipment 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 HE Equipment will offset losses from the drop in HE Equipment's long position.| BJs Restaurants vs. Jack In The | BJs Restaurants vs. Potbelly Co | BJs Restaurants vs. Rave Restaurant Group |
| HE Equipment vs. GATX Corporation | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Alta Equipment Group | HE Equipment vs. Ryder System |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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