Correlation Between BJs Restaurants and Hyatt Hotels
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Hyatt Hotels 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 Hyatt Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Hyatt Hotels, you can compare the effects of market volatilities on BJs Restaurants and Hyatt Hotels 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 Hyatt Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Hyatt Hotels.
Diversification Opportunities for BJs Restaurants and Hyatt Hotels
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BJs and Hyatt is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Hyatt Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyatt Hotels 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 Hyatt Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyatt Hotels has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Hyatt Hotels go up and down completely randomly.
Pair Corralation between BJs Restaurants and Hyatt Hotels
Assuming the 90 days trading horizon BJs Restaurants is expected to generate 1.58 times more return on investment than Hyatt Hotels. However, BJs Restaurants is 1.58 times more volatile than Hyatt Hotels. It trades about 0.04 of its potential returns per unit of risk. Hyatt Hotels is currently generating about 0.04 per unit of risk. If you would invest 3,220 in BJs Restaurants on August 31, 2024 and sell it today you would earn a total of 360.00 from holding BJs Restaurants or generate 11.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. Hyatt Hotels
Performance |
| Timeline |
| BJs Restaurants |
| Hyatt Hotels |
BJs Restaurants and Hyatt Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Hyatt Hotels
The main advantage of trading using opposite BJs Restaurants and Hyatt Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Hyatt Hotels 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 Hyatt Hotels will offset losses from the drop in Hyatt Hotels' long position.| BJs Restaurants vs. Kaiser Aluminum | BJs Restaurants vs. Infrastrutture Wireless Italiane | BJs Restaurants vs. AAC TECHNOLOGHLDGADR | BJs Restaurants vs. SIMS METAL MGT |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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