Correlation Between BJs Restaurants and Avnet
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Avnet 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 Avnet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Avnet Inc, you can compare the effects of market volatilities on BJs Restaurants and Avnet 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 Avnet. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Avnet.
Diversification Opportunities for BJs Restaurants and Avnet
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BJs and Avnet is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Avnet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avnet Inc 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 Avnet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avnet Inc has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Avnet go up and down completely randomly.
Pair Corralation between BJs Restaurants and Avnet
Assuming the 90 days trading horizon BJs Restaurants is expected to generate 1.65 times more return on investment than Avnet. However, BJs Restaurants is 1.65 times more volatile than Avnet Inc. It trades about 0.25 of its potential returns per unit of risk. Avnet Inc is currently generating about 0.09 per unit of risk. If you would invest 3,080 in BJs Restaurants on September 4, 2024 and sell it today you would earn a total of 480.00 from holding BJs Restaurants or generate 15.58% 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. Avnet Inc
Performance |
| Timeline |
| BJs Restaurants |
| Avnet Inc |
BJs Restaurants and Avnet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Avnet
The main advantage of trading using opposite BJs Restaurants and Avnet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Avnet 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 Avnet will offset losses from the drop in Avnet's long position.| BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc |
| Avnet vs. Universal Display | Avnet vs. UPDATE SOFTWARE | Avnet vs. Computershare Limited | Avnet vs. CyberArk Software |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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