Correlation Between BUDWEISER BREWUNSPADR/4 and BJs Restaurants

Can any of the company-specific risk be diversified away by investing in both BUDWEISER BREWUNSPADR/4 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 BUDWEISER BREWUNSPADR/4 and BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BUDWEISER BREWUNSPADR4 and BJs Restaurants, you can compare the effects of market volatilities on BUDWEISER BREWUNSPADR/4 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 BUDWEISER BREWUNSPADR/4 with a short position of BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of BUDWEISER BREWUNSPADR/4 and BJs Restaurants.

Diversification Opportunities for BUDWEISER BREWUNSPADR/4 and BJs Restaurants

-0.23

Correlation Coefficient

BUDWEISER BREWUNSPADR/4  BJs Restaurants

Very good diversification

The 3 months correlation between BUDWEISER and BJs is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding BUDWEISER BREWUNSPADR4 and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and BUDWEISER BREWUNSPADR/4 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 BUDWEISER BREWUNSPADR4 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 BUDWEISER BREWUNSPADR/4 i.e., BUDWEISER BREWUNSPADR/4 and BJs Restaurants go up and down completely randomly.

Pair Corralation between BUDWEISER BREWUNSPADR/4 and BJs Restaurants

Assuming the 90 days trading horizon BUDWEISER BREWUNSPADR4 is expected to generate 1.5 times more return on investment than BJs Restaurants. However, BUDWEISER BREWUNSPADR/4 is 1.5 times more volatile than BJs Restaurants. It trades about 0.16 of its potential returns per unit of risk. BJs Restaurants is currently generating about -0.08 per unit of risk. If you would invest  324.00  in BUDWEISER BREWUNSPADR4 on December 21, 2024 and sell it today you would earn a total of  98.00  from holding BUDWEISER BREWUNSPADR4 or generate 30.25% return on investment over 90 days.

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

BUDWEISER BREWUNSPADR4  vs.  BJs Restaurants

BUDWEISER BREWUNSPADR/4

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BUDWEISER BREWUNSPADR4 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, BUDWEISER BREWUNSPADR/4 reported solid returns over the last few months and may actually be approaching a breakup point.

BJs Restaurants

Risk-Adjusted Performance

Very Weak

Over the last 90 days BJs Restaurants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with BUDWEISER BREWUNSPADR/4 and BJs Restaurants

The main advantage of trading using opposite BUDWEISER BREWUNSPADR/4 and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BUDWEISER BREWUNSPADR/4 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 BUDWEISER BREWUNSPADR4 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.