Correlation Between BJs Restaurants and United Parks
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and United Parks 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 United Parks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and United Parks Resorts, you can compare the effects of market volatilities on BJs Restaurants and United Parks 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 United Parks. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and United Parks.
Diversification Opportunities for BJs Restaurants and United Parks
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BJs and United is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and United Parks Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parks 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 United Parks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parks Resorts has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and United Parks go up and down completely randomly.
Pair Corralation between BJs Restaurants and United Parks
Given the investment horizon of 90 days BJs Restaurants is expected to generate 3.99 times less return on investment than United Parks. In addition to that, BJs Restaurants is 1.36 times more volatile than United Parks Resorts. It trades about 0.02 of its total potential returns per unit of risk. United Parks Resorts is currently generating about 0.12 per unit of volatility. If you would invest 5,490 in United Parks Resorts on August 30, 2024 and sell it today you would earn a total of 317.00 from holding United Parks Resorts or generate 5.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. United Parks Resorts
Performance |
| Timeline |
| BJs Restaurants |
| United Parks Resorts |
BJs Restaurants and United Parks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and United Parks
The main advantage of trading using opposite BJs Restaurants and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, United Parks 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 United Parks will offset losses from the drop in United Parks' long position.| BJs Restaurants vs. Chipotle Mexican Grill | BJs Restaurants vs. Yum Brands | BJs Restaurants vs. The Wendys Co | BJs Restaurants vs. McDonalds |
| United Parks vs. Chipotle Mexican Grill | United Parks vs. Yum Brands | United Parks vs. The Wendys Co | United Parks vs. McDonalds |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |