Correlation Between BJs Restaurants and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Spirent Communications 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 Spirent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Spirent Communications plc, you can compare the effects of market volatilities on BJs Restaurants and Spirent Communications 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 Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Spirent Communications.
Diversification Opportunities for BJs Restaurants and Spirent Communications
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BJs and Spirent is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications 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 Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Spirent Communications go up and down completely randomly.
Pair Corralation between BJs Restaurants and Spirent Communications
Assuming the 90 days trading horizon BJs Restaurants is expected to generate 3.95 times less return on investment than Spirent Communications. In addition to that, BJs Restaurants is 1.98 times more volatile than Spirent Communications plc. It trades about 0.04 of its total potential returns per unit of risk. Spirent Communications plc is currently generating about 0.27 per unit of volatility. If you would invest 202.00 in Spirent Communications plc on September 12, 2024 and sell it today you would earn a total of 14.00 from holding Spirent Communications plc or generate 6.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. Spirent Communications plc
Performance |
| Timeline |
| BJs Restaurants |
| Spirent Communications |
BJs Restaurants and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Spirent Communications
The main advantage of trading using opposite BJs Restaurants and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Spirent Communications 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.| BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc |
| Spirent Communications vs. Superior Plus Corp | Spirent Communications vs. SIVERS SEMICONDUCTORS AB | Spirent Communications vs. Norsk Hydro ASA | Spirent Communications vs. Reliance Steel Aluminum |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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