Correlation Between BJs Restaurants and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Sumitomo Mitsui 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 Sumitomo Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Sumitomo Mitsui Construction, you can compare the effects of market volatilities on BJs Restaurants and Sumitomo Mitsui 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 Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Sumitomo Mitsui.
Diversification Opportunities for BJs Restaurants and Sumitomo Mitsui
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BJs and Sumitomo is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Sumitomo Mitsui Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Cons 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 Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Cons has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between BJs Restaurants and Sumitomo Mitsui
Assuming the 90 days trading horizon BJs Restaurants is expected to generate 1.74 times more return on investment than Sumitomo Mitsui. However, BJs Restaurants is 1.74 times more volatile than Sumitomo Mitsui Construction. It trades about 0.17 of its potential returns per unit of risk. Sumitomo Mitsui Construction is currently generating about 0.07 per unit of risk. If you would invest 2,760 in BJs Restaurants on September 2, 2024 and sell it today you would earn a total of 820.00 from holding BJs Restaurants or generate 29.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. Sumitomo Mitsui Construction
Performance |
| Timeline |
| BJs Restaurants |
| Sumitomo Mitsui Cons |
BJs Restaurants and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Sumitomo Mitsui
The main advantage of trading using opposite BJs Restaurants and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Sumitomo Mitsui 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 Sumitomo Mitsui will offset losses from the drop in Sumitomo Mitsui's long position.| BJs Restaurants vs. ELECTRONIC ARTS | BJs Restaurants vs. REVO INSURANCE SPA | BJs Restaurants vs. Japan Post Insurance | BJs Restaurants vs. Safety Insurance Group |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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