Correlation Between BJs Restaurants and Nathans Famous
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Nathans Famous 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 Nathans Famous into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Nathans Famous, you can compare the effects of market volatilities on BJs Restaurants and Nathans Famous 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 Nathans Famous. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Nathans Famous.
Diversification Opportunities for BJs Restaurants and Nathans Famous
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BJs and Nathans is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Nathans Famous in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nathans Famous 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 Nathans Famous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nathans Famous has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Nathans Famous go up and down completely randomly.
Pair Corralation between BJs Restaurants and Nathans Famous
Given the investment horizon of 90 days BJs Restaurants is expected to generate 5.7 times less return on investment than Nathans Famous. In addition to that, BJs Restaurants is 1.54 times more volatile than Nathans Famous. It trades about 0.01 of its total potential returns per unit of risk. Nathans Famous is currently generating about 0.1 per unit of volatility. If you would invest 6,794 in Nathans Famous on August 24, 2024 and sell it today you would earn a total of 1,637 from holding Nathans Famous or generate 24.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. Nathans Famous
Performance |
| Timeline |
| BJs Restaurants |
| Nathans Famous |
BJs Restaurants and Nathans Famous Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Nathans Famous
The main advantage of trading using opposite BJs Restaurants and Nathans Famous positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Nathans Famous 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 Nathans Famous will offset losses from the drop in Nathans Famous' long position.| BJs Restaurants vs. Dine Brands Global | BJs Restaurants vs. Brinker International | BJs Restaurants vs. Bloomin Brands | BJs Restaurants vs. The Cheesecake Factory |
| Nathans Famous vs. Bloomin Brands | Nathans Famous vs. BJs Restaurants | Nathans Famous vs. Darden Restaurants | Nathans Famous vs. Wingstop |
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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