Correlation Between Nathans Famous and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both Nathans Famous 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 Nathans Famous and BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nathans Famous and BJs Restaurants, you can compare the effects of market volatilities on Nathans Famous 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 Nathans Famous with a short position of BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nathans Famous and BJs Restaurants.
Diversification Opportunities for Nathans Famous and BJs Restaurants
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nathans and BJs is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Nathans Famous and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and Nathans Famous 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 Nathans Famous 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 Nathans Famous i.e., Nathans Famous and BJs Restaurants go up and down completely randomly.
Pair Corralation between Nathans Famous and BJs Restaurants
Given the investment horizon of 90 days Nathans Famous is expected to generate 0.65 times more return on investment than BJs Restaurants. However, Nathans Famous is 1.54 times less risky than BJs Restaurants. It trades about 0.1 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.01 per unit of risk. If you would invest 6,794 in Nathans Famous on August 24, 2024 and sell it today you would earn a total of 1,637 from holding Nathans Famous or generate 24.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nathans Famous vs. BJs Restaurants
Performance |
| Timeline |
| Nathans Famous |
| BJs Restaurants |
Nathans Famous and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nathans Famous and BJs Restaurants
The main advantage of trading using opposite Nathans Famous and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nathans Famous 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.| Nathans Famous vs. Bloomin Brands | Nathans Famous vs. BJs Restaurants | Nathans Famous vs. Darden Restaurants | Nathans Famous vs. Wingstop |
| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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