Correlation Between BJs Restaurants and RadNet
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and RadNet 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 RadNet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and RadNet Inc, you can compare the effects of market volatilities on BJs Restaurants and RadNet 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 RadNet. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and RadNet.
Diversification Opportunities for BJs Restaurants and RadNet
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BJs and RadNet is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and RadNet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RadNet Inc 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 RadNet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RadNet Inc has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and RadNet go up and down completely randomly.
Pair Corralation between BJs Restaurants and RadNet
Given the investment horizon of 90 days BJs Restaurants is expected to generate 60.62 times less return on investment than RadNet. But when comparing it to its historical volatility, BJs Restaurants is 1.43 times less risky than RadNet. It trades about 0.01 of its potential returns per unit of risk. RadNet Inc is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 6,709 in RadNet Inc on August 28, 2024 and sell it today you would earn a total of 1,436 from holding RadNet Inc or generate 21.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. RadNet Inc
Performance |
| Timeline |
| BJs Restaurants |
| RadNet Inc |
BJs Restaurants and RadNet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and RadNet
The main advantage of trading using opposite BJs Restaurants and RadNet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, RadNet 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 RadNet will offset losses from the drop in RadNet'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 |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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