Correlation Between Strategic Investments and BJs Restaurants

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

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

Diversification Opportunities for Strategic Investments and BJs Restaurants

-0.41

Correlation Coefficient

Strategic Investments  BJs Restaurants

Very good diversification

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

Pair Corralation between Strategic Investments and BJs Restaurants

Assuming the 90 days horizon Strategic Investments AS is expected to under-perform the BJs Restaurants. In addition to that, Strategic Investments is 1.7 times more volatile than BJs Restaurants. It trades about -0.01 of its total potential returns per unit of risk. BJs Restaurants is currently generating about 0.1 per unit of volatility. If you would invest  2,880  in BJs Restaurants on September 22, 2024 and sell it today you would earn a total of  480.00  from holding BJs Restaurants or generate 16.67% return on investment over 90 days.

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

Strategic Investments AS  vs.  BJs Restaurants

Strategic Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strategic Investments AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Strategic Investments is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

BJs Restaurants

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, BJs Restaurants unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Strategic Investments and BJs Restaurants

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

The idea behind Strategic Investments AS and BJs Restaurants 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.