Correlation Between BJs Restaurants and STOAU

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

By analyzing existing cross correlation between BJs Restaurants and STOAU 3649 29 APR 31, you can compare the effects of market volatilities on BJs Restaurants and STOAU 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 STOAU. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and STOAU.

Diversification Opportunities for BJs Restaurants and STOAU

-0.14

Correlation Coefficient

BJs Restaurants  STOAU

Good diversification

The 3 months correlation between BJs and STOAU is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and STOAU 3649 29 APR 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STOAU 3649 29 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 STOAU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STOAU 3649 29 has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and STOAU go up and down completely randomly.

Pair Corralation between BJs Restaurants and STOAU

Given the investment horizon of 90 days BJs Restaurants is expected to under-perform the STOAU. In addition to that, BJs Restaurants is 4.29 times more volatile than STOAU 3649 29 APR 31. It trades about -0.02 of its total potential returns per unit of risk. STOAU 3649 29 APR 31 is currently generating about 0.01 per unit of volatility. If you would invest  8,851  in STOAU 3649 29 APR 31 on December 21, 2024 and sell it today you would earn a total of  12.00  from holding STOAU 3649 29 APR 31 or generate 0.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	51.67%
Values	Daily Returns

BJs Restaurants  vs.  STOAU 3649 29 APR 31

BJs Restaurants

Risk-Adjusted Performance

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.

STOAU 3649 29

Risk-Adjusted Performance

Very Weak

Over the last 90 days STOAU 3649 29 APR 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, STOAU is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BJs Restaurants and STOAU

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

The idea behind BJs Restaurants and STOAU 3649 29 APR 31 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.

Check out your portfolio center.

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 Anywhere module to track or share privately all of your investments from the convenience of any device.