Correlation Between BJs Restaurants and Merit Medical
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Merit Medical 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 Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Merit Medical Systems, you can compare the effects of market volatilities on BJs Restaurants and Merit Medical 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 Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Merit Medical.
Diversification Opportunities for BJs Restaurants and Merit Medical
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BJs and Merit is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems 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 Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Merit Medical go up and down completely randomly.
Pair Corralation between BJs Restaurants and Merit Medical
Given the investment horizon of 90 days BJs Restaurants is expected to generate 2.1 times more return on investment than Merit Medical. However, BJs Restaurants is 2.1 times more volatile than Merit Medical Systems. It trades about 0.06 of its potential returns per unit of risk. Merit Medical Systems is currently generating about -0.02 per unit of risk. If you would invest 3,192 in BJs Restaurants on September 23, 2024 and sell it today you would earn a total of 283.00 from holding BJs Restaurants or generate 8.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
BJs Restaurants vs. Merit Medical Systems
Performance |
Timeline |
BJs Restaurants |
Merit Medical Systems |
BJs Restaurants and Merit Medical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BJs Restaurants and Merit Medical
The main advantage of trading using opposite BJs Restaurants and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical's long position.BJs Restaurants vs. Dine Brands Global | BJs Restaurants vs. Brinker International | BJs Restaurants vs. Bloomin Brands | BJs Restaurants vs. The Cheesecake Factory |
Merit Medical vs. Teleflex Incorporated | Merit Medical vs. The Cooper Companies, | Merit Medical vs. West Pharmaceutical Services | Merit Medical vs. ICU Medical |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
CEOs Directory Screen CEOs from public companies around the world | |
Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |