Correlation Between BJs Restaurants and PFIZER

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

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

Diversification Opportunities for BJs Restaurants and PFIZER

-0.56

Correlation Coefficient

BJs Restaurants  PFIZER

Excellent diversification

The 3 months correlation between BJs and PFIZER is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and PFIZER INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PFIZER INC 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 PFIZER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PFIZER INC has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and PFIZER go up and down completely randomly.

Pair Corralation between BJs Restaurants and PFIZER

Given the investment horizon of 90 days BJs Restaurants is expected to generate 8.91 times more return on investment than PFIZER. However, BJs Restaurants is 8.91 times more volatile than PFIZER INC. It trades about 0.01 of its potential returns per unit of risk. PFIZER INC is currently generating about 0.03 per unit of risk. If you would invest  3,547  in BJs Restaurants on September 29, 2024 and sell it today you would lose (73.00) from holding BJs Restaurants or give up 2.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

BJs Restaurants  vs.  PFIZER INC

BJs Restaurants

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 4 (%) 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 January 2025.

PFIZER INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PFIZER INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PFIZER 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 PFIZER

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

The idea behind BJs Restaurants and PFIZER INC 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.