Correlation Between BJs Restaurants and Life Time
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Life Time 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 Life Time into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Life Time Group, you can compare the effects of market volatilities on BJs Restaurants and Life Time 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 Life Time. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Life Time.
Diversification Opportunities for BJs Restaurants and Life Time
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BJs and Life is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Life Time Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Time Group 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 Life Time. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Time Group has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Life Time go up and down completely randomly.
Pair Corralation between BJs Restaurants and Life Time
Given the investment horizon of 90 days BJs Restaurants is expected to generate 1.48 times more return on investment than Life Time. However, BJs Restaurants is 1.48 times more volatile than Life Time Group. It trades about 0.29 of its potential returns per unit of risk. Life Time Group is currently generating about 0.22 per unit of risk. If you would invest 3,344 in BJs Restaurants on September 3, 2024 and sell it today you would earn a total of 500.00 from holding BJs Restaurants or generate 14.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. Life Time Group
Performance |
| Timeline |
| BJs Restaurants |
| Life Time Group |
BJs Restaurants and Life Time Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Life Time
The main advantage of trading using opposite BJs Restaurants and Life Time positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Life Time 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 Life Time will offset losses from the drop in Life Time'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 |
| Life Time vs. Planet Fitness | Life Time vs. JAKKS Pacific | Life Time vs. Mattel Inc | Life Time vs. OneSpaWorld 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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