Correlation Between BJs Restaurants and Park Hotels
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Park Hotels 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 Park Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Park Hotels Resorts, you can compare the effects of market volatilities on BJs Restaurants and Park Hotels 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 Park Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Park Hotels.
Diversification Opportunities for BJs Restaurants and Park Hotels
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between BJs and Park is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Park Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Hotels Resorts 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 Park Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Hotels Resorts has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Park Hotels go up and down completely randomly.
Pair Corralation between BJs Restaurants and Park Hotels
Given the investment horizon of 90 days BJs Restaurants is expected to generate 14.36 times less return on investment than Park Hotels. In addition to that, BJs Restaurants is 1.64 times more volatile than Park Hotels Resorts. It trades about 0.01 of its total potential returns per unit of risk. Park Hotels Resorts is currently generating about 0.27 per unit of volatility. If you would invest 1,396 in Park Hotels Resorts on August 28, 2024 and sell it today you would earn a total of 154.00 from holding Park Hotels Resorts or generate 11.03% 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. Park Hotels Resorts
Performance |
| Timeline |
| BJs Restaurants |
| Park Hotels Resorts |
BJs Restaurants and Park Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Park Hotels
The main advantage of trading using opposite BJs Restaurants and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Park Hotels 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 Park Hotels will offset losses from the drop in Park Hotels' long position.| BJs Restaurants vs. Dine Brands Global | BJs Restaurants vs. Brinker International | BJs Restaurants vs. Bloomin Brands | BJs Restaurants vs. The Cheesecake Factory |
| Park Hotels vs. Diamondrock Hospitality | Park Hotels vs. Ryman Hospitality Properties | Park Hotels vs. Pebblebrook Hotel Trust | Park Hotels vs. Sunstone Hotel Investors |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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