Correlation Between First Watch and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both First Watch 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 First Watch and BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Watch Restaurant and BJs Restaurants, you can compare the effects of market volatilities on First Watch 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 First Watch with a short position of BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Watch and BJs Restaurants.
Diversification Opportunities for First Watch and BJs Restaurants
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and BJs is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and First Watch 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 First Watch Restaurant 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 First Watch i.e., First Watch and BJs Restaurants go up and down completely randomly.
Pair Corralation between First Watch and BJs Restaurants
Given the investment horizon of 90 days First Watch is expected to generate 3.19 times less return on investment than BJs Restaurants. In addition to that, First Watch is 1.05 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 3,004 in BJs Restaurants on August 24, 2024 and sell it today you would earn a total of 499.00 from holding BJs Restaurants or generate 16.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
First Watch Restaurant vs. BJs Restaurants
Performance |
| Timeline |
| First Watch Restaurant |
| BJs Restaurants |
First Watch and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Watch and BJs Restaurants
The main advantage of trading using opposite First Watch and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Watch 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.| First Watch vs. Dine Brands Global | First Watch vs. Bloomin Brands | First Watch vs. BJs Restaurants | First Watch vs. The Cheesecake Factory |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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