Correlation Between Dine Brands and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both Dine Brands 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 Dine Brands and BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dine Brands Global and BJs Restaurants, you can compare the effects of market volatilities on Dine Brands 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 Dine Brands with a short position of BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dine Brands and BJs Restaurants.
Diversification Opportunities for Dine Brands and BJs Restaurants
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dine and BJs is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Dine Brands Global and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and Dine Brands 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 Dine Brands Global 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 Dine Brands i.e., Dine Brands and BJs Restaurants go up and down completely randomly.
Pair Corralation between Dine Brands and BJs Restaurants
Considering the 90-day investment horizon Dine Brands Global is expected to under-perform the BJs Restaurants. But the stock apears to be less risky and, when comparing its historical volatility, Dine Brands Global is 1.09 times less risky than BJs Restaurants. The stock trades about -0.04 of its potential returns per unit of risk. The BJs Restaurants is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,971 in BJs Restaurants on August 27, 2024 and sell it today you would earn a total of 563.00 from holding BJs Restaurants or generate 18.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dine Brands Global vs. BJs Restaurants
Performance |
| Timeline |
| Dine Brands Global |
| BJs Restaurants |
Dine Brands and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dine Brands and BJs Restaurants
The main advantage of trading using opposite Dine Brands and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dine Brands 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.| Dine Brands vs. Bloomin Brands | Dine Brands vs. BJs Restaurants | Dine Brands vs. The Cheesecake Factory | Dine Brands vs. Brinker International |
| BJs Restaurants vs. Dine Brands Global | BJs Restaurants vs. Brinker International | BJs Restaurants vs. Bloomin Brands | BJs Restaurants vs. The Cheesecake Factory |
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.
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