Correlation Between Triton International and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both Triton International 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 Triton International and BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Triton International Limited and BJs Restaurants, you can compare the effects of market volatilities on Triton International 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 Triton International with a short position of BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triton International and BJs Restaurants.
Diversification Opportunities for Triton International and BJs Restaurants
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Triton and BJs is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Triton International Limited and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and Triton International 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 Triton International Limited 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 Triton International i.e., Triton International and BJs Restaurants go up and down completely randomly.
Pair Corralation between Triton International and BJs Restaurants
Assuming the 90 days trading horizon Triton International is expected to generate 1.0 times less return on investment than BJs Restaurants. But when comparing it to its historical volatility, Triton International Limited is 3.14 times less risky than BJs Restaurants. It trades about 0.06 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,523 in BJs Restaurants on September 12, 2024 and sell it today you would earn a total of 147.00 from holding BJs Restaurants or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Triton International Limited vs. BJs Restaurants
Performance |
| Timeline |
| Triton International |
| BJs Restaurants |
Triton International and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Triton International and BJs Restaurants
The main advantage of trading using opposite Triton International and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triton International 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.The idea behind Triton International Limited and BJs Restaurants pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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