Correlation Between BJs Restaurants and State Bank
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and State Bank 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 State Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and State Bank of, you can compare the effects of market volatilities on BJs Restaurants and State Bank 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 State Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and State Bank.
Diversification Opportunities for BJs Restaurants and State Bank
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BJs and State is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank 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 State Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Bank has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and State Bank go up and down completely randomly.
Pair Corralation between BJs Restaurants and State Bank
Assuming the 90 days trading horizon BJs Restaurants is expected to under-perform the State Bank. In addition to that, BJs Restaurants is 1.31 times more volatile than State Bank of. It trades about -0.01 of its total potential returns per unit of risk. State Bank of is currently generating about 0.09 per unit of volatility. If you would invest 8,550 in State Bank of on August 25, 2024 and sell it today you would earn a total of 350.00 from holding State Bank of or generate 4.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. State Bank of
Performance |
| Timeline |
| BJs Restaurants |
| State Bank |
BJs Restaurants and State Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and State Bank
The main advantage of trading using opposite BJs Restaurants and State Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, State Bank 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 State Bank will offset losses from the drop in State Bank's long position.| BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc |
| State Bank vs. THORNEY TECHS LTD | State Bank vs. ETFS Coffee ETC | State Bank vs. BioNTech SE | State Bank vs. BJs Restaurants |
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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