Correlation Between Hooker Furniture and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both Hooker Furniture 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 Hooker Furniture and BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hooker Furniture and BJs Restaurants, you can compare the effects of market volatilities on Hooker Furniture 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 Hooker Furniture with a short position of BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hooker Furniture and BJs Restaurants.
Diversification Opportunities for Hooker Furniture and BJs Restaurants
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hooker and BJs is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and Hooker Furniture 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 Hooker Furniture 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 Hooker Furniture i.e., Hooker Furniture and BJs Restaurants go up and down completely randomly.
Pair Corralation between Hooker Furniture and BJs Restaurants
Given the investment horizon of 90 days Hooker Furniture is expected to generate 1.13 times more return on investment than BJs Restaurants. However, Hooker Furniture is 1.13 times more volatile than BJs Restaurants. It trades about 0.18 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.01 per unit of risk. If you would invest 1,605 in Hooker Furniture on August 29, 2024 and sell it today you would earn a total of 212.00 from holding Hooker Furniture or generate 13.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hooker Furniture vs. BJs Restaurants
Performance |
| Timeline |
| Hooker Furniture |
| BJs Restaurants |
Hooker Furniture and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hooker Furniture and BJs Restaurants
The main advantage of trading using opposite Hooker Furniture and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hooker Furniture 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.| Hooker Furniture vs. Willis Lease Finance | Hooker Furniture vs. Rocky Brands | Hooker Furniture vs. First Business Financial |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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