Correlation Between BJs Restaurants and CROWN

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

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

Diversification Opportunities for BJs Restaurants and CROWN

-0.41

Correlation Coefficient

BJs Restaurants  CROWN

Very good diversification

The 3 months correlation between BJs and CROWN is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and CROWN CASTLE INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CROWN CASTLE INTERNA 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 CROWN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CROWN CASTLE INTERNA has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and CROWN go up and down completely randomly.

Pair Corralation between BJs Restaurants and CROWN

Given the investment horizon of 90 days BJs Restaurants is expected to generate 2.18 times more return on investment than CROWN. However, BJs Restaurants is 2.18 times more volatile than CROWN CASTLE INTERNATIONAL. It trades about 0.04 of its potential returns per unit of risk. CROWN CASTLE INTERNATIONAL is currently generating about 0.05 per unit of risk. If you would invest  2,759  in BJs Restaurants on October 4, 2024 and sell it today you would earn a total of  755.00  from holding BJs Restaurants or generate 27.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	84.29%
Values	Daily Returns

BJs Restaurants  vs.  CROWN CASTLE INTERNATIONAL

BJs Restaurants

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

CROWN CASTLE INTERNA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CROWN CASTLE INTERNATIONAL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CROWN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BJs Restaurants and CROWN

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

The idea behind BJs Restaurants and CROWN CASTLE INTERNATIONAL 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.