Correlation Between BJs Restaurants and REVO INSURANCE
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and REVO INSURANCE 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 REVO INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and REVO INSURANCE SPA, you can compare the effects of market volatilities on BJs Restaurants and REVO INSURANCE 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 REVO INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and REVO INSURANCE.
Diversification Opportunities for BJs Restaurants and REVO INSURANCE
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BJs and REVO is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and REVO INSURANCE SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REVO INSURANCE SPA 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 REVO INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REVO INSURANCE SPA has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and REVO INSURANCE go up and down completely randomly.
Pair Corralation between BJs Restaurants and REVO INSURANCE
Assuming the 90 days trading horizon BJs Restaurants is expected to generate 1.53 times less return on investment than REVO INSURANCE. In addition to that, BJs Restaurants is 2.41 times more volatile than REVO INSURANCE SPA. It trades about 0.07 of its total potential returns per unit of risk. REVO INSURANCE SPA is currently generating about 0.26 per unit of volatility. If you would invest 1,000.00 in REVO INSURANCE SPA on August 31, 2024 and sell it today you would earn a total of 80.00 from holding REVO INSURANCE SPA or generate 8.0% 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. REVO INSURANCE SPA
Performance |
| Timeline |
| BJs Restaurants |
| REVO INSURANCE SPA |
BJs Restaurants and REVO INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and REVO INSURANCE
The main advantage of trading using opposite BJs Restaurants and REVO INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, REVO INSURANCE 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 REVO INSURANCE will offset losses from the drop in REVO INSURANCE'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 |
| REVO INSURANCE vs. Wizz Air Holdings | REVO INSURANCE vs. T MOBILE US | REVO INSURANCE vs. MTI WIRELESS EDGE | REVO INSURANCE vs. Scandinavian Tobacco Group |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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