Correlation Between BJs Restaurants and JD Sports
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and JD Sports 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 JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and JD Sports Fashion, you can compare the effects of market volatilities on BJs Restaurants and JD Sports 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 JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and JD Sports.
Diversification Opportunities for BJs Restaurants and JD Sports
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BJs and JDSPY is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion 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 JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and JD Sports go up and down completely randomly.
Pair Corralation between BJs Restaurants and JD Sports
Given the investment horizon of 90 days BJs Restaurants is expected to generate 0.51 times more return on investment than JD Sports. However, BJs Restaurants is 1.96 times less risky than JD Sports. It trades about 0.01 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.24 per unit of risk. If you would invest 3,730 in BJs Restaurants on August 29, 2024 and sell it today you would lose (24.00) from holding BJs Restaurants or give up 0.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. JD Sports Fashion
Performance |
| Timeline |
| BJs Restaurants |
| JD Sports Fashion |
BJs Restaurants and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and JD Sports
The main advantage of trading using opposite BJs Restaurants and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, JD Sports 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 JD Sports will offset losses from the drop in JD Sports' long position.| BJs Restaurants vs. Dine Brands Global | BJs Restaurants vs. Brinker International | BJs Restaurants vs. Bloomin Brands | BJs Restaurants vs. The Cheesecake Factory |
| JD Sports vs. Burlington Stores | JD Sports vs. Childrens Place | JD Sports vs. Buckle Inc | JD Sports vs. Shoe Carnival |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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