Correlation Between BJs Restaurants and NBCUNIVERSAL

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

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

Diversification Opportunities for BJs Restaurants and NBCUNIVERSAL

-0.18

Correlation Coefficient

BJs Restaurants  NBCUNIVERSAL

Good diversification

The 3 months correlation between BJs and NBCUNIVERSAL is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and NBCUNIVERSAL MEDIA LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBCUNIVERSAL MEDIA LLC 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 NBCUNIVERSAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBCUNIVERSAL MEDIA LLC has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and NBCUNIVERSAL go up and down completely randomly.

Pair Corralation between BJs Restaurants and NBCUNIVERSAL

Given the investment horizon of 90 days BJs Restaurants is expected to generate 2.48 times more return on investment than NBCUNIVERSAL. However, BJs Restaurants is 2.48 times more volatile than NBCUNIVERSAL MEDIA LLC. It trades about 0.02 of its potential returns per unit of risk. NBCUNIVERSAL MEDIA LLC is currently generating about -0.1 per unit of risk. If you would invest  3,418  in BJs Restaurants on October 15, 2024 and sell it today you would earn a total of  24.00  from holding BJs Restaurants or generate 0.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	72.13%
Values	Daily Returns

BJs Restaurants  vs.  NBCUNIVERSAL MEDIA LLC

BJs Restaurants

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 1 (%) 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 recent stock price confusion, may contribute to short-horizon losses for the traders.

NBCUNIVERSAL MEDIA LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NBCUNIVERSAL MEDIA LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NBCUNIVERSAL MEDIA LLC investors.

Pair Trading with BJs Restaurants and NBCUNIVERSAL

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

The idea behind BJs Restaurants and NBCUNIVERSAL MEDIA LLC 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.