Correlation Between BJs Restaurants and Apple
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Apple 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 Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Apple Inc, you can compare the effects of market volatilities on BJs Restaurants and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Apple.
Diversification Opportunities for BJs Restaurants and Apple
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BJs and Apple is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Apple go up and down completely randomly.
Pair Corralation between BJs Restaurants and Apple
Assuming the 90 days trading horizon BJs Restaurants is expected to generate 1.33 times less return on investment than Apple. In addition to that, BJs Restaurants is 1.81 times more volatile than Apple Inc. It trades about 0.05 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.11 per unit of volatility. If you would invest 17,665 in Apple Inc on August 28, 2024 and sell it today you would earn a total of 4,275 from holding Apple Inc or generate 24.2% 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. Apple Inc
Performance |
| Timeline |
| BJs Restaurants |
| Apple Inc |
BJs Restaurants and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Apple
The main advantage of trading using opposite BJs Restaurants and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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