Correlation Between BJs Restaurants and Starbucks
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Starbucks 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 Starbucks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Starbucks, you can compare the effects of market volatilities on BJs Restaurants and Starbucks 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 Starbucks. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Starbucks.
Diversification Opportunities for BJs Restaurants and Starbucks
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BJs and Starbucks is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks 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 Starbucks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbucks has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Starbucks go up and down completely randomly.
Pair Corralation between BJs Restaurants and Starbucks
Given the investment horizon of 90 days BJs Restaurants is expected to generate 14.51 times less return on investment than Starbucks. But when comparing it to its historical volatility, BJs Restaurants is 1.11 times less risky than Starbucks. It trades about 0.03 of its potential returns per unit of risk. Starbucks is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 9,217 in Starbucks on November 3, 2024 and sell it today you would earn a total of 1,551 from holding Starbucks or generate 16.83% 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. Starbucks
Performance |
| Timeline |
| BJs Restaurants |
| Starbucks |
BJs Restaurants and Starbucks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Starbucks
The main advantage of trading using opposite BJs Restaurants and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Starbucks 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 Starbucks will offset losses from the drop in Starbucks' long position.| BJs Restaurants vs. Dine Brands Global | BJs Restaurants vs. Brinker International | BJs Restaurants vs. Bloomin Brands | BJs Restaurants vs. The Cheesecake Factory |
| Starbucks vs. Chipotle Mexican Grill | Starbucks vs. Dominos Pizza Common | Starbucks vs. Yum Brands | Starbucks vs. The Wendys Co |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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