Correlation Between Thyssenkrupp and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both Thyssenkrupp 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 Thyssenkrupp and BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between thyssenkrupp AG and BJs Restaurants, you can compare the effects of market volatilities on Thyssenkrupp 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 Thyssenkrupp with a short position of BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thyssenkrupp and BJs Restaurants.
Diversification Opportunities for Thyssenkrupp and BJs Restaurants
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thyssenkrupp and BJs is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding thyssenkrupp AG and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and Thyssenkrupp 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 thyssenkrupp AG 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 Thyssenkrupp i.e., Thyssenkrupp and BJs Restaurants go up and down completely randomly.
Pair Corralation between Thyssenkrupp and BJs Restaurants
Assuming the 90 days trading horizon thyssenkrupp AG is expected to generate 1.42 times more return on investment than BJs Restaurants. However, Thyssenkrupp is 1.42 times more volatile than BJs Restaurants. It trades about 0.34 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.04 per unit of risk. If you would invest 333.00 in thyssenkrupp AG on September 12, 2024 and sell it today you would earn a total of 85.00 from holding thyssenkrupp AG or generate 25.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
thyssenkrupp AG vs. BJs Restaurants
Performance |
| Timeline |
| thyssenkrupp AG |
| BJs Restaurants |
Thyssenkrupp and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thyssenkrupp and BJs Restaurants
The main advantage of trading using opposite Thyssenkrupp and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thyssenkrupp 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.| Thyssenkrupp vs. Grupo Carso SAB | Thyssenkrupp vs. Big 5 Sporting | Thyssenkrupp vs. Columbia Sportswear | Thyssenkrupp vs. COMMERCIAL VEHICLE |
| BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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