Correlation Between BJs Restaurants and Align Technology
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Align Technology 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 Align Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Align Technology, you can compare the effects of market volatilities on BJs Restaurants and Align Technology 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 Align Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Align Technology.
Diversification Opportunities for BJs Restaurants and Align Technology
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BJs and Align is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Align Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Align Technology 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 Align Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Align Technology has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Align Technology go up and down completely randomly.
Pair Corralation between BJs Restaurants and Align Technology
Assuming the 90 days trading horizon BJs Restaurants is expected to generate 2.24 times less return on investment than Align Technology. In addition to that, BJs Restaurants is 1.92 times more volatile than Align Technology. It trades about 0.07 of its total potential returns per unit of risk. Align Technology is currently generating about 0.3 per unit of volatility. If you would invest 19,370 in Align Technology on August 31, 2024 and sell it today you would earn a total of 2,290 from holding Align Technology or generate 11.82% 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. Align Technology
Performance |
| Timeline |
| BJs Restaurants |
| Align Technology |
BJs Restaurants and Align Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Align Technology
The main advantage of trading using opposite BJs Restaurants and Align Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Align Technology 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 Align Technology will offset losses from the drop in Align Technology's long position.| BJs Restaurants vs. Kaiser Aluminum | BJs Restaurants vs. Infrastrutture Wireless Italiane | BJs Restaurants vs. AAC TECHNOLOGHLDGADR | BJs Restaurants vs. SIMS METAL MGT |
| Align Technology vs. Stryker | Align Technology vs. Insulet | Align Technology vs. Superior Plus Corp | Align Technology vs. NMI Holdings |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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