Correlation Between BJs Restaurants and KCE EL
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and KCE EL 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 KCE EL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and KCE EL PCL, you can compare the effects of market volatilities on BJs Restaurants and KCE EL 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 KCE EL. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and KCE EL.
Diversification Opportunities for BJs Restaurants and KCE EL
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BJs and KCE is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and KCE EL PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KCE EL PCL 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 KCE EL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KCE EL PCL has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and KCE EL go up and down completely randomly.
Pair Corralation between BJs Restaurants and KCE EL
Assuming the 90 days trading horizon BJs Restaurants is expected to generate 0.99 times more return on investment than KCE EL. However, BJs Restaurants is 1.01 times less risky than KCE EL. It trades about 0.17 of its potential returns per unit of risk. KCE EL PCL is currently generating about -0.21 per unit of risk. If you would invest 2,740 in BJs Restaurants on September 4, 2024 and sell it today you would earn a total of 820.00 from holding BJs Restaurants or generate 29.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
BJs Restaurants vs. KCE EL PCL
Performance |
| Timeline |
| BJs Restaurants |
| KCE EL PCL |
BJs Restaurants and KCE EL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and KCE EL
The main advantage of trading using opposite BJs Restaurants and KCE EL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, KCE EL 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 KCE EL will offset losses from the drop in KCE EL's long position.| BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc |
| KCE EL vs. INTERSHOP Communications Aktiengesellschaft | KCE EL vs. BJs Restaurants | KCE EL vs. Charter Communications | KCE EL vs. Methode Electronics |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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