Correlation Between Reinsurance Group and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both Reinsurance Group 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 Reinsurance Group and BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reinsurance Group of and BJs Restaurants, you can compare the effects of market volatilities on Reinsurance Group 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 Reinsurance Group with a short position of BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reinsurance Group and BJs Restaurants.
Diversification Opportunities for Reinsurance Group and BJs Restaurants
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Reinsurance and BJs is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and Reinsurance Group 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 Reinsurance Group of 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 Reinsurance Group i.e., Reinsurance Group and BJs Restaurants go up and down completely randomly.
Pair Corralation between Reinsurance Group and BJs Restaurants
Assuming the 90 days trading horizon Reinsurance Group of is expected to generate 0.9 times more return on investment than BJs Restaurants. However, Reinsurance Group of is 1.11 times less risky than BJs Restaurants. It trades about 0.19 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.07 per unit of risk. If you would invest 19,415 in Reinsurance Group of on August 31, 2024 and sell it today you would earn a total of 2,385 from holding Reinsurance Group of or generate 12.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reinsurance Group of vs. BJs Restaurants
Performance |
| Timeline |
| Reinsurance Group |
| BJs Restaurants |
Reinsurance Group and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reinsurance Group and BJs Restaurants
The main advantage of trading using opposite Reinsurance Group and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reinsurance Group 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.| Reinsurance Group vs. Corporate Travel Management | Reinsurance Group vs. XLMedia PLC | Reinsurance Group vs. Jupiter Fund Management | Reinsurance Group vs. Playtech plc |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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