Correlation Between BJs Restaurants and SunOpta

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

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

Diversification Opportunities for BJs Restaurants and SunOpta

0.41

Correlation Coefficient

BJs Restaurants  SunOpta

Very weak diversification

The 3 months correlation between BJs and SunOpta is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta 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 SunOpta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunOpta has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and SunOpta go up and down completely randomly.

Pair Corralation between BJs Restaurants and SunOpta

Given the investment horizon of 90 days BJs Restaurants is expected to generate 1.49 times less return on investment than SunOpta. But when comparing it to its historical volatility, BJs Restaurants is 1.06 times less risky than SunOpta. It trades about 0.06 of its potential returns per unit of risk. SunOpta is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  675.00  in SunOpta on September 23, 2024 and sell it today you would earn a total of  98.00  from holding SunOpta or generate 14.52% 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.  SunOpta

BJs Restaurants

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, BJs Restaurants may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SunOpta

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SunOpta are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, SunOpta disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BJs Restaurants and SunOpta

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

The idea behind BJs Restaurants and SunOpta 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 Stocks Directory module to find actively traded stocks across global markets.