Correlation Between BJs Restaurants and Hooker Furniture
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Hooker Furniture 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 Hooker Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Hooker Furniture, you can compare the effects of market volatilities on BJs Restaurants and Hooker Furniture 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 Hooker Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Hooker Furniture.
Diversification Opportunities for BJs Restaurants and Hooker Furniture
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BJs and Hooker is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture 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 Hooker Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hooker Furniture has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Hooker Furniture go up and down completely randomly.
Pair Corralation between BJs Restaurants and Hooker Furniture
Given the investment horizon of 90 days BJs Restaurants is expected to generate 3.62 times less return on investment than Hooker Furniture. But when comparing it to its historical volatility, BJs Restaurants is 1.01 times less risky than Hooker Furniture. It trades about 0.07 of its potential returns per unit of risk. Hooker Furniture is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,603 in Hooker Furniture on September 1, 2024 and sell it today you would earn a total of 270.00 from holding Hooker Furniture or generate 16.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. Hooker Furniture
Performance |
| Timeline |
| BJs Restaurants |
| Hooker Furniture |
BJs Restaurants and Hooker Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Hooker Furniture
The main advantage of trading using opposite BJs Restaurants and Hooker Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Hooker Furniture 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 Hooker Furniture will offset losses from the drop in Hooker Furniture'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 |
| Hooker Furniture vs. Bassett Furniture Industries | Hooker Furniture vs. Willis Lease Finance | Hooker Furniture vs. Rocky Brands | Hooker Furniture vs. First Business Financial |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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