Correlation Between BJs Restaurants and Mach Natural
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Mach Natural 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 Mach Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Mach Natural Resources, you can compare the effects of market volatilities on BJs Restaurants and Mach Natural 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 Mach Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Mach Natural.
Diversification Opportunities for BJs Restaurants and Mach Natural
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BJs and Mach is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Mach Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mach Natural Resources 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 Mach Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mach Natural Resources has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Mach Natural go up and down completely randomly.
Pair Corralation between BJs Restaurants and Mach Natural
Given the investment horizon of 90 days BJs Restaurants is expected to generate 1.52 times more return on investment than Mach Natural. However, BJs Restaurants is 1.52 times more volatile than Mach Natural Resources. It trades about 0.03 of its potential returns per unit of risk. Mach Natural Resources is currently generating about 0.01 per unit of risk. If you would invest 2,952 in BJs Restaurants on September 2, 2024 and sell it today you would earn a total of 892.00 from holding BJs Restaurants or generate 30.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 56.05% |
| Values | Daily Returns |
BJs Restaurants vs. Mach Natural Resources
Performance |
| Timeline |
| BJs Restaurants |
| Mach Natural Resources |
BJs Restaurants and Mach Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Mach Natural
The main advantage of trading using opposite BJs Restaurants and Mach Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Mach Natural 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 Mach Natural will offset losses from the drop in Mach Natural'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 |
| Mach Natural vs. Bright Scholar Education | Mach Natural vs. KeyCorp | Mach Natural vs. Ihuman Inc | Mach Natural vs. Juniata Valley Financial |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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