Correlation Between BJs Restaurants and Lake Resources
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Lake Resources 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 Lake Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Lake Resources NL, you can compare the effects of market volatilities on BJs Restaurants and Lake Resources 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 Lake Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Lake Resources.
Diversification Opportunities for BJs Restaurants and Lake Resources
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between BJs and Lake is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Lake Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Resources NL 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 Lake Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lake Resources NL has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Lake Resources go up and down completely randomly.
Pair Corralation between BJs Restaurants and Lake Resources
Given the investment horizon of 90 days BJs Restaurants is expected to generate 2.72 times less return on investment than Lake Resources. But when comparing it to its historical volatility, BJs Restaurants is 3.53 times less risky than Lake Resources. It trades about 0.02 of its potential returns per unit of risk. Lake Resources NL is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 5.52 in Lake Resources NL on November 3, 2024 and sell it today you would lose (2.72) from holding Lake Resources NL or give up 49.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. Lake Resources NL
Performance |
| Timeline |
| BJs Restaurants |
| Lake Resources NL |
BJs Restaurants and Lake Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Lake Resources
The main advantage of trading using opposite BJs Restaurants and Lake Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Lake Resources 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 Lake Resources will offset losses from the drop in Lake Resources' long position.| BJs Restaurants vs. Dine Brands Global | BJs Restaurants vs. Brinker International | BJs Restaurants vs. Bloomin Brands | BJs Restaurants vs. The Cheesecake Factory |
| Lake Resources vs. Ballys Corp | Lake Resources vs. RCI Hospitality Holdings | Lake Resources vs. RLJ Lodging Trust | Lake Resources vs. Summit Hotel Properties |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Stocks Directory Find actively traded stocks across global markets | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |