Correlation Between BJs Restaurants and Jiangsu Expressway
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Jiangsu Expressway 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 Jiangsu Expressway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Jiangsu Expressway, you can compare the effects of market volatilities on BJs Restaurants and Jiangsu Expressway 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 Jiangsu Expressway. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Jiangsu Expressway.
Diversification Opportunities for BJs Restaurants and Jiangsu Expressway
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BJs and Jiangsu is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Jiangsu Expressway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Expressway 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 Jiangsu Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Expressway has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Jiangsu Expressway go up and down completely randomly.
Pair Corralation between BJs Restaurants and Jiangsu Expressway
Given the investment horizon of 90 days BJs Restaurants is expected to under-perform the Jiangsu Expressway. In addition to that, BJs Restaurants is 2.43 times more volatile than Jiangsu Expressway. It trades about -0.04 of its total potential returns per unit of risk. Jiangsu Expressway is currently generating about 0.23 per unit of volatility. If you would invest 110.00 in Jiangsu Expressway on October 21, 2024 and sell it today you would earn a total of 3.00 from holding Jiangsu Expressway or generate 2.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. Jiangsu Expressway
Performance |
| Timeline |
| BJs Restaurants |
| Jiangsu Expressway |
BJs Restaurants and Jiangsu Expressway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Jiangsu Expressway
The main advantage of trading using opposite BJs Restaurants and Jiangsu Expressway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Jiangsu Expressway 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 Jiangsu Expressway will offset losses from the drop in Jiangsu Expressway'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 |
| Jiangsu Expressway vs. BJs Restaurants | Jiangsu Expressway vs. Vistra Energy Corp | Jiangsu Expressway vs. GE Vernova LLC | Jiangsu Expressway vs. RCI Hospitality Holdings |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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