Correlation Between BJs Restaurants and AG Mortgage
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and AG Mortgage 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 AG Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and AG Mortgage Investment, you can compare the effects of market volatilities on BJs Restaurants and AG Mortgage 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 AG Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and AG Mortgage.
Diversification Opportunities for BJs Restaurants and AG Mortgage
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between BJs and MITP is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and AG Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AG Mortgage Investment 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 AG Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AG Mortgage Investment has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and AG Mortgage go up and down completely randomly.
Pair Corralation between BJs Restaurants and AG Mortgage
Given the investment horizon of 90 days BJs Restaurants is expected to generate 5.88 times more return on investment than AG Mortgage. However, BJs Restaurants is 5.88 times more volatile than AG Mortgage Investment. It trades about 0.04 of its potential returns per unit of risk. AG Mortgage Investment is currently generating about 0.01 per unit of risk. If you would invest 3,570 in BJs Restaurants on November 7, 2024 and sell it today you would earn a total of 115.00 from holding BJs Restaurants or generate 3.22% 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. AG Mortgage Investment
Performance |
| Timeline |
| BJs Restaurants |
| AG Mortgage Investment |
BJs Restaurants and AG Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and AG Mortgage
The main advantage of trading using opposite BJs Restaurants and AG Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, AG Mortgage 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 AG Mortgage will offset losses from the drop in AG Mortgage'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 |
| AG Mortgage vs. Summit Materials | AG Mortgage vs. Mako Mining Corp | AG Mortgage vs. RTG Mining | AG Mortgage vs. Viemed Healthcare |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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