Correlation Between BJs Restaurants and Steel Dynamics
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Steel Dynamics 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 Steel Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Steel Dynamics, you can compare the effects of market volatilities on BJs Restaurants and Steel Dynamics 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 Steel Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Steel Dynamics.
Diversification Opportunities for BJs Restaurants and Steel Dynamics
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BJs and Steel is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Steel Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Dynamics 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 Steel Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Dynamics has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Steel Dynamics go up and down completely randomly.
Pair Corralation between BJs Restaurants and Steel Dynamics
Assuming the 90 days trading horizon BJs Restaurants is expected to generate 1.41 times more return on investment than Steel Dynamics. However, BJs Restaurants is 1.41 times more volatile than Steel Dynamics. It trades about 0.04 of its potential returns per unit of risk. Steel Dynamics is currently generating about -0.21 per unit of risk. If you would invest 3,300 in BJs Restaurants on September 13, 2024 and sell it today you would earn a total of 40.00 from holding BJs Restaurants or generate 1.21% 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. Steel Dynamics
Performance |
| Timeline |
| BJs Restaurants |
| Steel Dynamics |
BJs Restaurants and Steel Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Steel Dynamics
The main advantage of trading using opposite BJs Restaurants and Steel Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Steel Dynamics 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 Steel Dynamics will offset losses from the drop in Steel Dynamics' long position.| BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc |
| Steel Dynamics vs. KENEDIX OFFICE INV | Steel Dynamics vs. MTI WIRELESS EDGE | Steel Dynamics vs. BJs Restaurants | Steel Dynamics vs. Internet Thailand PCL |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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