Correlation Between BJs Restaurants and Carrols Restaurant

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

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

Diversification Opportunities for BJs Restaurants and Carrols Restaurant

0.0

Correlation Coefficient

BJs Restaurants  Carrols Restaurant

Pay attention - limited upside

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

Pair Corralation between BJs Restaurants and Carrols Restaurant

If you would invest  3,482  in BJs Restaurants on December 28, 2024 and sell it today you would earn a total of  163.00  from holding BJs Restaurants or generate 4.68% return on investment over 90 days.

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

BJs Restaurants  vs.  Carrols Restaurant Group

BJs Restaurants

Risk-Adjusted Performance

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 April 2025.

Carrols Restaurant

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carrols Restaurant Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Carrols Restaurant is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BJs Restaurants and Carrols Restaurant

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

The idea behind BJs Restaurants and Carrols Restaurant Group 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.