Correlation Between BJs Restaurants and PACIFIC

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

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

Diversification Opportunities for BJs Restaurants and PACIFIC

0.08

Correlation Coefficient

BJs Restaurants  PACIFIC

Significant diversification

The 3 months correlation between BJs and PACIFIC is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and PACIFIC GAS AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACIFIC GAS AND 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 PACIFIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACIFIC GAS AND has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and PACIFIC go up and down completely randomly.

Pair Corralation between BJs Restaurants and PACIFIC

Given the investment horizon of 90 days BJs Restaurants is expected to generate 320.54 times less return on investment than PACIFIC. But when comparing it to its historical volatility, BJs Restaurants is 1.46 times less risky than PACIFIC. It trades about 0.0 of its potential returns per unit of risk. PACIFIC GAS AND is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  8,793  in PACIFIC GAS AND on October 24, 2024 and sell it today you would earn a total of  2,110  from holding PACIFIC GAS AND or generate 24.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BJs Restaurants  vs.  PACIFIC GAS AND

BJs Restaurants

Risk-Adjusted Performance

0 of 100

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 recent stock price confusion, may contribute to short-horizon losses for the traders.

PACIFIC GAS AND

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PACIFIC GAS AND are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, PACIFIC sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BJs Restaurants and PACIFIC

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

The idea behind BJs Restaurants and PACIFIC GAS AND 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.