Correlation Between BJs Restaurants and Shimmick Common

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

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

Diversification Opportunities for BJs Restaurants and Shimmick Common

0.02

Correlation Coefficient

BJs Restaurants  Shimmick Common

Significant diversification

The 3 months correlation between BJs and Shimmick is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Shimmick Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shimmick Common 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 Shimmick Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shimmick Common has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Shimmick Common go up and down completely randomly.

Pair Corralation between BJs Restaurants and Shimmick Common

Given the investment horizon of 90 days BJs Restaurants is expected to generate 0.4 times more return on investment than Shimmick Common. However, BJs Restaurants is 2.51 times less risky than Shimmick Common. It trades about 0.0 of its potential returns per unit of risk. Shimmick Common is currently generating about -0.04 per unit of risk. If you would invest  3,548  in BJs Restaurants on October 9, 2024 and sell it today you would lose (24.00) from holding BJs Restaurants or give up 0.68% 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.  Shimmick Common

BJs Restaurants

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, BJs Restaurants demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Shimmick Common

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shimmick Common are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile forward indicators, Shimmick Common displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BJs Restaurants and Shimmick Common

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

The idea behind BJs Restaurants and Shimmick Common 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 Transaction History module to view history of all your transactions and understand their impact on performance.