Correlation Between BJs Restaurants and Evonik Industries
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Evonik Industries 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 Evonik Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Evonik Industries AG, you can compare the effects of market volatilities on BJs Restaurants and Evonik Industries 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 Evonik Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Evonik Industries.
Diversification Opportunities for BJs Restaurants and Evonik Industries
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BJs and Evonik is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Evonik Industries AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evonik Industries 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 Evonik Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evonik Industries has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Evonik Industries go up and down completely randomly.
Pair Corralation between BJs Restaurants and Evonik Industries
Assuming the 90 days trading horizon BJs Restaurants is expected to generate 2.04 times more return on investment than Evonik Industries. However, BJs Restaurants is 2.04 times more volatile than Evonik Industries AG. It trades about 0.03 of its potential returns per unit of risk. Evonik Industries AG is currently generating about 0.02 per unit of risk. If you would invest 2,600 in BJs Restaurants on September 14, 2024 and sell it today you would earn a total of 820.00 from holding BJs Restaurants or generate 31.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
BJs Restaurants vs. Evonik Industries AG
Performance |
| Timeline |
| BJs Restaurants |
| Evonik Industries |
BJs Restaurants and Evonik Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Evonik Industries
The main advantage of trading using opposite BJs Restaurants and Evonik Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Evonik Industries 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 Evonik Industries will offset losses from the drop in Evonik Industries' long position.| BJs Restaurants vs. GREENX METALS LTD | BJs Restaurants vs. North American Construction | BJs Restaurants vs. Dairy Farm International | BJs Restaurants vs. DISTRICT METALS |
| Evonik Industries vs. BJs Restaurants | Evonik Industries vs. HOCHSCHILD MINING | Evonik Industries vs. QINGCI GAMES INC | Evonik Industries vs. International Game 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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