Correlation Between BJs Restaurants and JD
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and JD 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 BJs Restaurants and JD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and JD Inc, you can compare the effects of market volatilities on BJs Restaurants and JD 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 BJs Restaurants with a short position of JD. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and JD.
Diversification Opportunities for BJs Restaurants and JD
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BJs and JD is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and JD Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Inc and BJs Restaurants 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 BJs Restaurants are associated (or correlated) with JD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Inc has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and JD go up and down completely randomly.
Pair Corralation between BJs Restaurants and JD
Assuming the 90 days trading horizon BJs Restaurants is expected to generate 2.79 times less return on investment than JD. But when comparing it to its historical volatility, BJs Restaurants is 1.39 times less risky than JD. It trades about 0.07 of its potential returns per unit of risk. JD Inc is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,685 in JD Inc on September 14, 2024 and sell it today you would earn a total of 155.00 from holding JD Inc or generate 9.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. JD Inc
Performance |
| Timeline |
| BJs Restaurants |
| JD Inc |
BJs Restaurants and JD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and JD
The main advantage of trading using opposite BJs Restaurants and JD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, JD 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 JD will offset losses from the drop in JD's long position.| BJs Restaurants vs. GREENX METALS LTD | BJs Restaurants vs. North American Construction | BJs Restaurants vs. Dairy Farm International | BJs Restaurants vs. DISTRICT METALS |
| JD vs. Sumitomo Rubber Industries | JD vs. BJs Restaurants | JD vs. Compagnie Plastic Omnium | JD vs. Verizon Communications |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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