Correlation Between Custom Truck and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both Custom Truck and BJs Restaurants 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 Custom Truck and BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Custom Truck One and BJs Restaurants, you can compare the effects of market volatilities on Custom Truck and BJs Restaurants 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 Custom Truck with a short position of BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Custom Truck and BJs Restaurants.
Diversification Opportunities for Custom Truck and BJs Restaurants
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Custom and BJs is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Custom Truck One and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and Custom Truck 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 Custom Truck One are associated (or correlated) with BJs Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Restaurants has no effect on the direction of Custom Truck i.e., Custom Truck and BJs Restaurants go up and down completely randomly.
Pair Corralation between Custom Truck and BJs Restaurants
Given the investment horizon of 90 days Custom Truck is expected to generate 2.43 times less return on investment than BJs Restaurants. In addition to that, Custom Truck is 1.18 times more volatile than BJs Restaurants. It trades about 0.01 of its total potential returns per unit of risk. BJs Restaurants is currently generating about 0.04 per unit of volatility. If you would invest 2,997 in BJs Restaurants on August 30, 2024 and sell it today you would earn a total of 787.00 from holding BJs Restaurants or generate 26.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.75% |
| Values | Daily Returns |
Custom Truck One vs. BJs Restaurants
Performance |
| Timeline |
| Custom Truck One |
| BJs Restaurants |
Custom Truck and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Custom Truck and BJs Restaurants
The main advantage of trading using opposite Custom Truck and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Custom Truck position performs unexpectedly, BJs Restaurants 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 BJs Restaurants will offset losses from the drop in BJs Restaurants' long position.| Custom Truck vs. PROG Holdings | Custom Truck vs. McGrath RentCorp | Custom Truck vs. HE Equipment Services | Custom Truck vs. GATX Corporation |
| BJs Restaurants vs. Jack In The | BJs Restaurants vs. Potbelly Co | BJs Restaurants vs. Rave Restaurant Group |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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