Correlation Between BJs Restaurants and UMC Electronics
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and UMC Electronics 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 UMC Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and UMC Electronics Co, you can compare the effects of market volatilities on BJs Restaurants and UMC Electronics 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 UMC Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and UMC Electronics.
Diversification Opportunities for BJs Restaurants and UMC Electronics
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BJs and UMC is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and UMC Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMC Electronics 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 UMC Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UMC Electronics has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and UMC Electronics go up and down completely randomly.
Pair Corralation between BJs Restaurants and UMC Electronics
Assuming the 90 days trading horizon BJs Restaurants is expected to generate 1.03 times more return on investment than UMC Electronics. However, BJs Restaurants is 1.03 times more volatile than UMC Electronics Co. It trades about 0.04 of its potential returns per unit of risk. UMC Electronics Co is currently generating about 0.0 per unit of risk. If you would invest 2,960 in BJs Restaurants on September 4, 2024 and sell it today you would earn a total of 600.00 from holding BJs Restaurants or generate 20.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. UMC Electronics Co
Performance |
| Timeline |
| BJs Restaurants |
| UMC Electronics |
BJs Restaurants and UMC Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and UMC Electronics
The main advantage of trading using opposite BJs Restaurants and UMC Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, UMC Electronics 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 UMC Electronics will offset losses from the drop in UMC Electronics' long position.| BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc |
| UMC Electronics vs. Hon Hai Precision | UMC Electronics vs. Samsung SDI Co | UMC Electronics vs. Murata Manufacturing Co | UMC Electronics vs. Mitsubishi Electric |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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