Correlation Between BJs Restaurants and THORNEY TECHS
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and THORNEY TECHS 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 THORNEY TECHS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and THORNEY TECHS LTD, you can compare the effects of market volatilities on BJs Restaurants and THORNEY TECHS 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 THORNEY TECHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and THORNEY TECHS.
Diversification Opportunities for BJs Restaurants and THORNEY TECHS
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BJs and THORNEY is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and THORNEY TECHS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THORNEY TECHS LTD 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 THORNEY TECHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THORNEY TECHS LTD has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and THORNEY TECHS go up and down completely randomly.
Pair Corralation between BJs Restaurants and THORNEY TECHS
Assuming the 90 days trading horizon BJs Restaurants is expected to generate 1.23 times more return on investment than THORNEY TECHS. However, BJs Restaurants is 1.23 times more volatile than THORNEY TECHS LTD. It trades about 0.05 of its potential returns per unit of risk. THORNEY TECHS LTD is currently generating about 0.03 per unit of risk. If you would invest 3,420 in BJs Restaurants on August 28, 2024 and sell it today you would earn a total of 100.00 from holding BJs Restaurants or generate 2.92% 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. THORNEY TECHS LTD
Performance |
| Timeline |
| BJs Restaurants |
| THORNEY TECHS LTD |
BJs Restaurants and THORNEY TECHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and THORNEY TECHS
The main advantage of trading using opposite BJs Restaurants and THORNEY TECHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, THORNEY TECHS 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 THORNEY TECHS will offset losses from the drop in THORNEY TECHS's long position.| BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc |
| THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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