Correlation Between BJs Restaurants and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Universal Insurance 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 Universal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Universal Insurance Holdings, you can compare the effects of market volatilities on BJs Restaurants and Universal Insurance 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 Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Universal Insurance.
Diversification Opportunities for BJs Restaurants and Universal Insurance
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BJs and Universal is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance 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 Universal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Insurance has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Universal Insurance go up and down completely randomly.
Pair Corralation between BJs Restaurants and Universal Insurance
Assuming the 90 days trading horizon BJs Restaurants is expected to generate 0.92 times more return on investment than Universal Insurance. However, BJs Restaurants is 1.09 times less risky than Universal Insurance. It trades about 0.1 of its potential returns per unit of risk. Universal Insurance Holdings is currently generating about 0.03 per unit of risk. If you would invest 2,600 in BJs Restaurants on December 10, 2024 and sell it today you would earn a total of 720.00 from holding BJs Restaurants or generate 27.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. Universal Insurance Holdings
Performance |
| Timeline |
| BJs Restaurants |
| Universal Insurance |
BJs Restaurants and Universal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Universal Insurance
The main advantage of trading using opposite BJs Restaurants and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Universal Insurance 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 Universal Insurance will offset losses from the drop in Universal Insurance's long position.| BJs Restaurants vs. Geely Automobile Holdings | BJs Restaurants vs. T MOBILE INCDL 00001 | BJs Restaurants vs. WILLIS LEASE FIN | BJs Restaurants vs. Cairo Communication SpA |
| Universal Insurance vs. SBM OFFSHORE | Universal Insurance vs. Eastman Chemical | Universal Insurance vs. Mitsui Chemicals | Universal Insurance vs. Silicon Motion Technology |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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