Correlation Between BJs Restaurants and Acco Brands

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

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

Diversification Opportunities for BJs Restaurants and Acco Brands

0.08

Correlation Coefficient

BJs Restaurants  Acco Brands

Significant diversification

The 3 months correlation between BJs and Acco is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Acco Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acco Brands 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 Acco Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acco Brands has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Acco Brands go up and down completely randomly.

Pair Corralation between BJs Restaurants and Acco Brands

Given the investment horizon of 90 days BJs Restaurants is expected to generate 0.72 times more return on investment than Acco Brands. However, BJs Restaurants is 1.38 times less risky than Acco Brands. It trades about -0.06 of its potential returns per unit of risk. Acco Brands is currently generating about -0.09 per unit of risk. If you would invest  3,512  in BJs Restaurants on December 19, 2024 and sell it today you would lose (312.00) from holding BJs Restaurants or give up 8.88% of portfolio value over 90 days.

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

BJs Restaurants  vs.  Acco Brands

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. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Acco Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Acco Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with BJs Restaurants and Acco Brands

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

The idea behind BJs Restaurants and Acco Brands 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.