Correlation Between BJs Restaurants and Willamette Valley
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Willamette Valley 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 Willamette Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Willamette Valley Vineyards, you can compare the effects of market volatilities on BJs Restaurants and Willamette Valley 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 Willamette Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Willamette Valley.
Diversification Opportunities for BJs Restaurants and Willamette Valley
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BJs and Willamette is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley 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 Willamette Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willamette Valley has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Willamette Valley go up and down completely randomly.
Pair Corralation between BJs Restaurants and Willamette Valley
Given the investment horizon of 90 days BJs Restaurants is expected to generate 2.8 times more return on investment than Willamette Valley. However, BJs Restaurants is 2.8 times more volatile than Willamette Valley Vineyards. It trades about 0.03 of its potential returns per unit of risk. Willamette Valley Vineyards is currently generating about -0.2 per unit of risk. If you would invest 3,744 in BJs Restaurants on August 31, 2024 and sell it today you would earn a total of 40.00 from holding BJs Restaurants or generate 1.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. Willamette Valley Vineyards
Performance |
| Timeline |
| BJs Restaurants |
| Willamette Valley |
BJs Restaurants and Willamette Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Willamette Valley
The main advantage of trading using opposite BJs Restaurants and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Willamette Valley 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 Willamette Valley will offset losses from the drop in Willamette Valley'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 |
| Willamette Valley vs. Naked Wines plc | Willamette Valley vs. Andrew Peller Limited | Willamette Valley vs. Iconic Brands | Willamette Valley vs. Naked Wines plc |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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