Correlation Between BJs Restaurants and Red Rock
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Red Rock 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 Red Rock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Red Rock Resorts, you can compare the effects of market volatilities on BJs Restaurants and Red Rock 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 Red Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Red Rock.
Diversification Opportunities for BJs Restaurants and Red Rock
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BJs and Red is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Red Rock Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Rock 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 Red Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Rock Resorts has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Red Rock go up and down completely randomly.
Pair Corralation between BJs Restaurants and Red Rock
Given the investment horizon of 90 days BJs Restaurants is expected to generate 1.12 times more return on investment than Red Rock. However, BJs Restaurants is 1.12 times more volatile than Red Rock Resorts. It trades about -0.07 of its potential returns per unit of risk. Red Rock Resorts is currently generating about -0.1 per unit of risk. If you would invest 3,730 in BJs Restaurants on August 27, 2024 and sell it today you would lose (196.00) from holding BJs Restaurants or give up 5.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. Red Rock Resorts
Performance |
| Timeline |
| BJs Restaurants |
| Red Rock Resorts |
BJs Restaurants and Red Rock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Red Rock
The main advantage of trading using opposite BJs Restaurants and Red Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Red Rock 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 Red Rock will offset losses from the drop in Red Rock'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 |
| Red Rock vs. Golden Entertainment | Red Rock vs. Century Casinos | Red Rock vs. Studio City International | Red Rock vs. Ballys 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |