Correlation Between BJs Restaurants and Weibo Corp
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Weibo Corp 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 Weibo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Weibo Corp, you can compare the effects of market volatilities on BJs Restaurants and Weibo Corp 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 Weibo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Weibo Corp.
Diversification Opportunities for BJs Restaurants and Weibo Corp
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BJs and Weibo is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp 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 Weibo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weibo Corp has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Weibo Corp go up and down completely randomly.
Pair Corralation between BJs Restaurants and Weibo Corp
Given the investment horizon of 90 days BJs Restaurants is expected to generate 1.58 times less return on investment than Weibo Corp. But when comparing it to its historical volatility, BJs Restaurants is 1.5 times less risky than Weibo Corp. It trades about 0.1 of its potential returns per unit of risk. Weibo Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 734.00 in Weibo Corp on August 28, 2024 and sell it today you would earn a total of 187.00 from holding Weibo Corp or generate 25.48% 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. Weibo Corp
Performance |
| Timeline |
| BJs Restaurants |
| Weibo Corp |
BJs Restaurants and Weibo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Weibo Corp
The main advantage of trading using opposite BJs Restaurants and Weibo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Weibo Corp 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 Weibo Corp will offset losses from the drop in Weibo Corp'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 |
| Weibo Corp vs. YY Inc Class | Weibo Corp vs. DouYu International Holdings | Weibo Corp vs. Tencent Music Entertainment | Weibo Corp vs. Autohome |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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