Correlation Between BJs Restaurants and RCI Hospitality
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and RCI Hospitality 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 RCI Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and RCI Hospitality Holdings, you can compare the effects of market volatilities on BJs Restaurants and RCI Hospitality 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 RCI Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and RCI Hospitality.
Diversification Opportunities for BJs Restaurants and RCI Hospitality
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BJs and RCI is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and RCI Hospitality Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCI Hospitality Holdings 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 RCI Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCI Hospitality Holdings has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and RCI Hospitality go up and down completely randomly.
Pair Corralation between BJs Restaurants and RCI Hospitality
Given the investment horizon of 90 days BJs Restaurants is expected to under-perform the RCI Hospitality. In addition to that, BJs Restaurants is 1.06 times more volatile than RCI Hospitality Holdings. It trades about -0.07 of its total potential returns per unit of risk. RCI Hospitality Holdings is currently generating about 0.26 per unit of volatility. If you would invest 4,470 in RCI Hospitality Holdings on August 27, 2024 and sell it today you would earn a total of 698.00 from holding RCI Hospitality Holdings or generate 15.62% 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. RCI Hospitality Holdings
Performance |
| Timeline |
| BJs Restaurants |
| RCI Hospitality Holdings |
BJs Restaurants and RCI Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and RCI Hospitality
The main advantage of trading using opposite BJs Restaurants and RCI Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, RCI Hospitality 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 RCI Hospitality will offset losses from the drop in RCI Hospitality'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 |
| RCI Hospitality vs. Brinker International | RCI Hospitality vs. Bloomin Brands | RCI Hospitality vs. BJs Restaurants | RCI Hospitality vs. Dennys Corp |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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