Correlation Between BJs Restaurants and South Jersey

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

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

Diversification Opportunities for BJs Restaurants and South Jersey

0.0

Correlation Coefficient

BJs Restaurants  South Jersey

Pay attention - limited upside

The 3 months correlation between BJs and South is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and South Jersey Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Jersey Industries 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 South Jersey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Jersey Industries has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and South Jersey go up and down completely randomly.

Pair Corralation between BJs Restaurants and South Jersey

If you would invest  3,562  in BJs Restaurants on December 26, 2024 and sell it today you would lose (3.00) from holding BJs Restaurants or give up 0.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

BJs Restaurants  vs.  South Jersey Industries

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 fairly strong basic indicators, BJs Restaurants is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

South Jersey Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days South Jersey Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, South Jersey is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with BJs Restaurants and South Jersey

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

The idea behind BJs Restaurants and South Jersey Industries 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.