Correlation Between Weyerhaeuser and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both Weyerhaeuser 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 Weyerhaeuser and BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weyerhaeuser and BJs Restaurants, you can compare the effects of market volatilities on Weyerhaeuser 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 Weyerhaeuser with a short position of BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weyerhaeuser and BJs Restaurants.
Diversification Opportunities for Weyerhaeuser and BJs Restaurants
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Weyerhaeuser and BJs is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Weyerhaeuser and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and Weyerhaeuser 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 Weyerhaeuser 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 Weyerhaeuser i.e., Weyerhaeuser and BJs Restaurants go up and down completely randomly.
Pair Corralation between Weyerhaeuser and BJs Restaurants
Assuming the 90 days horizon Weyerhaeuser is expected to generate 3.62 times less return on investment than BJs Restaurants. But when comparing it to its historical volatility, Weyerhaeuser is 1.9 times less risky than BJs Restaurants. It trades about 0.01 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,740 in BJs Restaurants on December 11, 2024 and sell it today you would earn a total of 580.00 from holding BJs Restaurants or generate 21.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weyerhaeuser vs. BJs Restaurants
Performance |
| Timeline |
| Weyerhaeuser |
| BJs Restaurants |
Weyerhaeuser and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weyerhaeuser and BJs Restaurants
The main advantage of trading using opposite Weyerhaeuser and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weyerhaeuser 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.| Weyerhaeuser vs. GOLDQUEST MINING | ||
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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