Correlation Between EPlay Digital and BJs Restaurants

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

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

Diversification Opportunities for EPlay Digital and BJs Restaurants

0.0

Correlation Coefficient

EPlay Digital  BJs Restaurants

Pay attention - limited upside

The 3 months correlation between EPlay and BJs is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ePlay Digital and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and EPlay Digital 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 ePlay Digital 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 EPlay Digital i.e., EPlay Digital and BJs Restaurants go up and down completely randomly.

Pair Corralation between EPlay Digital and BJs Restaurants

Assuming the 90 days trading horizon ePlay Digital is expected to generate 40.59 times more return on investment than BJs Restaurants. However, EPlay Digital is 40.59 times more volatile than BJs Restaurants. It trades about 0.15 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.03 per unit of risk. If you would invest  0.50  in ePlay Digital on September 26, 2024 and sell it today you would lose (0.40) from holding ePlay Digital or give up 80.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ePlay Digital  vs.  BJs Restaurants

ePlay Digital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ePlay Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, EPlay Digital is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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. In spite of comparatively uncertain basic indicators, BJs Restaurants unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EPlay Digital and BJs Restaurants

The main advantage of trading using opposite EPlay Digital and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPlay Digital 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 ePlay Digital 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..