Correlation Between BJs Restaurants and Neogen
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Neogen 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 Neogen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Neogen, you can compare the effects of market volatilities on BJs Restaurants and Neogen 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 Neogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Neogen.
Diversification Opportunities for BJs Restaurants and Neogen
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BJs and Neogen is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Neogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neogen 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 Neogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neogen has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Neogen go up and down completely randomly.
Pair Corralation between BJs Restaurants and Neogen
Given the investment horizon of 90 days BJs Restaurants is expected to generate 5.34 times less return on investment than Neogen. But when comparing it to its historical volatility, BJs Restaurants is 1.01 times less risky than Neogen. It trades about 0.01 of its potential returns per unit of risk. Neogen is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,405 in Neogen on August 28, 2024 and sell it today you would earn a total of 12.00 from holding Neogen or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. Neogen
Performance |
| Timeline |
| BJs Restaurants |
| Neogen |
BJs Restaurants and Neogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Neogen
The main advantage of trading using opposite BJs Restaurants and Neogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Neogen 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 Neogen will offset losses from the drop in Neogen'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 |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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