Correlation Between Chia and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both Chia 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 Chia and BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chia and BJs Restaurants, you can compare the effects of market volatilities on Chia 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 Chia with a short position of BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia and BJs Restaurants.
Diversification Opportunities for Chia and BJs Restaurants
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Chia and BJs is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Chia and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and Chia 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 Chia 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 Chia i.e., Chia and BJs Restaurants go up and down completely randomly.
Pair Corralation between Chia and BJs Restaurants
Assuming the 90 days trading horizon Chia is expected to generate 4.23 times more return on investment than BJs Restaurants. However, Chia is 4.23 times more volatile than BJs Restaurants. It trades about 0.09 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.1 per unit of risk. If you would invest 1,300 in Chia on November 1, 2024 and sell it today you would earn a total of 440.00 from holding Chia or generate 33.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 93.75% |
| Values | Daily Returns |
Chia vs. BJs Restaurants
Performance |
| Timeline |
| Chia |
| BJs Restaurants |
Chia and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chia and BJs Restaurants
The main advantage of trading using opposite Chia and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia 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 Chia 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.| BJs Restaurants vs. PENN NATL GAMING | BJs Restaurants vs. GAMING FAC SA | BJs Restaurants vs. CONTAGIOUS GAMING INC | BJs Restaurants vs. TRADEDOUBLER AB SK |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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