Correlation Between BJs Restaurants and Hawkins
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Hawkins 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 Hawkins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Hawkins, you can compare the effects of market volatilities on BJs Restaurants and Hawkins 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 Hawkins. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Hawkins.
Diversification Opportunities for BJs Restaurants and Hawkins
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BJs and Hawkins is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins 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 Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Hawkins go up and down completely randomly.
Pair Corralation between BJs Restaurants and Hawkins
Given the investment horizon of 90 days BJs Restaurants is expected to generate 1.07 times more return on investment than Hawkins. However, BJs Restaurants is 1.07 times more volatile than Hawkins. It trades about 0.01 of its potential returns per unit of risk. Hawkins is currently generating about -0.07 per unit of risk. If you would invest 3,493 in BJs Restaurants on September 19, 2024 and sell it today you would lose (6.00) from holding BJs Restaurants or give up 0.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. Hawkins
Performance |
| Timeline |
| BJs Restaurants |
| Hawkins |
BJs Restaurants and Hawkins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Hawkins
The main advantage of trading using opposite BJs Restaurants and Hawkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Hawkins 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 Hawkins will offset losses from the drop in Hawkins' long position.| BJs Restaurants vs. Dine Brands Global | BJs Restaurants vs. Brinker International | BJs Restaurants vs. Bloomin Brands | BJs Restaurants vs. The Cheesecake Factory |
| Hawkins vs. H B Fuller | Hawkins vs. Minerals Technologies | Hawkins vs. Quaker Chemical | Hawkins vs. Oil Dri |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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