Correlation Between BJs Restaurants and Aegean Airlines

Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Aegean Airlines 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 Aegean Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BJs Restaurants and Aegean Airlines SA, you can compare the effects of market volatilities on BJs Restaurants and Aegean Airlines 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 Aegean Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Aegean Airlines.

Diversification Opportunities for BJs Restaurants and Aegean Airlines

-0.57

Correlation Coefficient

BJs Restaurants  Aegean Airlines

Excellent diversification

The 3 months correlation between BJs and Aegean is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Aegean Airlines SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegean Airlines SA 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 Aegean Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegean Airlines SA has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Aegean Airlines go up and down completely randomly.

Pair Corralation between BJs Restaurants and Aegean Airlines

Given the investment horizon of 90 days BJs Restaurants is expected to generate 1.98 times more return on investment than Aegean Airlines. However, BJs Restaurants is 1.98 times more volatile than Aegean Airlines SA. It trades about 0.09 of its potential returns per unit of risk. Aegean Airlines SA is currently generating about -0.13 per unit of risk. If you would invest  3,137  in BJs Restaurants on September 14, 2024 and sell it today you would earn a total of  451.00  from holding BJs Restaurants or generate 14.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

BJs Restaurants  vs.  Aegean Airlines SA

BJs Restaurants

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, BJs Restaurants demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Aegean Airlines SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aegean Airlines SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with BJs Restaurants and Aegean Airlines

The main advantage of trading using opposite BJs Restaurants and Aegean Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Aegean Airlines 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 Aegean Airlines will offset losses from the drop in Aegean Airlines' long position.

The idea behind BJs Restaurants and Aegean Airlines SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.