Correlation Between MEDICAL FACILITIES and BJs Restaurants

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

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

Diversification Opportunities for MEDICAL FACILITIES and BJs Restaurants

0.84

Correlation Coefficient

MEDICAL FACILITIES  BJs Restaurants

Very poor diversification

The 3 months correlation between MEDICAL and BJs is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding MEDICAL FACILITIES NEW and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and MEDICAL FACILITIES 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 MEDICAL FACILITIES NEW 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 MEDICAL FACILITIES i.e., MEDICAL FACILITIES and BJs Restaurants go up and down completely randomly.

Pair Corralation between MEDICAL FACILITIES and BJs Restaurants

Assuming the 90 days horizon MEDICAL FACILITIES NEW is expected to under-perform the BJs Restaurants. But the stock apears to be less risky and, when comparing its historical volatility, MEDICAL FACILITIES NEW is 1.42 times less risky than BJs Restaurants. The stock trades about -0.17 of its potential returns per unit of risk. The BJs Restaurants is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,460  in BJs Restaurants on October 4, 2024 and sell it today you would earn a total of  0.00  from holding BJs Restaurants or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

MEDICAL FACILITIES NEW  vs.  BJs Restaurants

MEDICAL FACILITIES NEW

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MEDICAL FACILITIES NEW are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, MEDICAL FACILITIES reported solid returns over the last few months and may actually be approaching a breakup point.

BJs Restaurants

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, BJs Restaurants unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MEDICAL FACILITIES and BJs Restaurants

The main advantage of trading using opposite MEDICAL FACILITIES and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEDICAL FACILITIES 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 MEDICAL FACILITIES NEW 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.