Correlation Between BJs Restaurants and Evolution Mining

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

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

Diversification Opportunities for BJs Restaurants and Evolution Mining

0.18

Correlation Coefficient

BJs Restaurants  Evolution Mining

Average diversification

The 3 months correlation between BJs and Evolution is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Evolution Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining 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 Evolution Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Mining has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Evolution Mining go up and down completely randomly.

Pair Corralation between BJs Restaurants and Evolution Mining

Given the investment horizon of 90 days BJs Restaurants is expected to generate 37.09 times less return on investment than Evolution Mining. But when comparing it to its historical volatility, BJs Restaurants is 1.23 times less risky than Evolution Mining. It trades about 0.0 of its potential returns per unit of risk. Evolution Mining is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  348.00  in Evolution Mining on October 24, 2024 and sell it today you would earn a total of  7.00  from holding Evolution Mining or generate 2.01% return on investment over 90 days.

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

BJs Restaurants  vs.  Evolution Mining

BJs Restaurants

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BJs Restaurants has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, BJs Restaurants is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Evolution Mining

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Evolution Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BJs Restaurants and Evolution Mining

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

The idea behind BJs Restaurants and Evolution Mining 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.