Correlation Between BJs Restaurants and 191216CX6

Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and 191216CX6 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 191216CX6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BJs Restaurants and COCA COLA CO, you can compare the effects of market volatilities on BJs Restaurants and 191216CX6 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 191216CX6. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and 191216CX6.

Diversification Opportunities for BJs Restaurants and 191216CX6

-0.28

Correlation Coefficient

BJs Restaurants  191216CX6

Very good diversification

The 3 months correlation between BJs and 191216CX6 is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and COCA COLA CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCA A CO 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 191216CX6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCA A CO has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and 191216CX6 go up and down completely randomly.

Pair Corralation between BJs Restaurants and 191216CX6

Given the investment horizon of 90 days BJs Restaurants is expected to under-perform the 191216CX6. But the stock apears to be less risky and, when comparing its historical volatility, BJs Restaurants is 1.85 times less risky than 191216CX6. The stock trades about -0.09 of its potential returns per unit of risk. The COCA COLA CO is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  6,405  in COCA COLA CO on September 26, 2024 and sell it today you would earn a total of  262.00  from holding COCA COLA CO or generate 4.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.3%
Values	Daily Returns

BJs Restaurants  vs.  COCA COLA CO

BJs Restaurants

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 5 (%) 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.

COCA A CO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COCA COLA CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 191216CX6 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BJs Restaurants and 191216CX6

The main advantage of trading using opposite BJs Restaurants and 191216CX6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, 191216CX6 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 191216CX6 will offset losses from the drop in 191216CX6's long position.

The idea behind BJs Restaurants and COCA COLA CO 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.