Correlation Between BJs Restaurants and Weyerhaeuser
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Weyerhaeuser 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 Weyerhaeuser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Weyerhaeuser, you can compare the effects of market volatilities on BJs Restaurants and Weyerhaeuser 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 Weyerhaeuser. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Weyerhaeuser.
Diversification Opportunities for BJs Restaurants and Weyerhaeuser
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BJs and Weyerhaeuser is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Weyerhaeuser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weyerhaeuser 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 Weyerhaeuser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weyerhaeuser has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Weyerhaeuser go up and down completely randomly.
Pair Corralation between BJs Restaurants and Weyerhaeuser
Assuming the 90 days trading horizon BJs Restaurants is expected to generate 1.9 times more return on investment than Weyerhaeuser. However, BJs Restaurants is 1.9 times more volatile than Weyerhaeuser. It trades about 0.03 of its potential returns per unit of risk. Weyerhaeuser is currently generating about 0.01 per unit of risk. If you would invest 2,740 in BJs Restaurants on December 11, 2024 and sell it today you would earn a total of 580.00 from holding BJs Restaurants or generate 21.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. Weyerhaeuser
Performance |
| Timeline |
| BJs Restaurants |
| Weyerhaeuser |
BJs Restaurants and Weyerhaeuser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Weyerhaeuser
The main advantage of trading using opposite BJs Restaurants and Weyerhaeuser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Weyerhaeuser 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 Weyerhaeuser will offset losses from the drop in Weyerhaeuser's long position.| BJs Restaurants vs. Geely Automobile Holdings | ||
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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