Correlation Between BJs Restaurants and Aptiv PLC

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

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

Diversification Opportunities for BJs Restaurants and Aptiv PLC

-0.44

Correlation Coefficient

BJs Restaurants  Aptiv PLC

Very good diversification

The 3 months correlation between BJs and Aptiv is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Aptiv PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptiv PLC 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 Aptiv PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptiv PLC has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Aptiv PLC go up and down completely randomly.

Pair Corralation between BJs Restaurants and Aptiv PLC

Given the investment horizon of 90 days BJs Restaurants is expected to generate 0.97 times more return on investment than Aptiv PLC. However, BJs Restaurants is 1.03 times less risky than Aptiv PLC. It trades about 0.09 of its potential returns per unit of risk. Aptiv PLC is currently generating about -0.05 per unit of risk. If you would invest  2,982  in BJs Restaurants on October 3, 2024 and sell it today you would earn a total of  532.00  from holding BJs Restaurants or generate 17.84% return on investment over 90 days.

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

BJs Restaurants  vs.  Aptiv PLC

BJs Restaurants

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, BJs Restaurants may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Aptiv PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptiv PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with BJs Restaurants and Aptiv PLC

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

The idea behind BJs Restaurants and Aptiv PLC 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..