Correlation Between BJs Restaurants and Carbon Revolution

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

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

Diversification Opportunities for BJs Restaurants and Carbon Revolution

-0.19

Correlation Coefficient

BJs Restaurants  Carbon Revolution

Good diversification

The 3 months correlation between BJs and Carbon is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Carbon Revolution Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbon Revolution Public 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 Carbon Revolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carbon Revolution Public has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Carbon Revolution go up and down completely randomly.

Pair Corralation between BJs Restaurants and Carbon Revolution

Given the investment horizon of 90 days BJs Restaurants is expected to under-perform the Carbon Revolution. But the stock apears to be less risky and, when comparing its historical volatility, BJs Restaurants is 14.94 times less risky than Carbon Revolution. The stock trades about -0.06 of its potential returns per unit of risk. The Carbon Revolution Public is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  202.00  in Carbon Revolution Public on October 12, 2024 and sell it today you would earn a total of  319.00  from holding Carbon Revolution Public or generate 157.92% return on investment over 90 days.

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

BJs Restaurants  vs.  Carbon Revolution Public

BJs Restaurants

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 4 (%) 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.

Carbon Revolution Public

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carbon Revolution Public are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, Carbon Revolution showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BJs Restaurants and Carbon Revolution

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

The idea behind BJs Restaurants and Carbon Revolution Public 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.