Correlation Between BJs Restaurants and Welsbach Technology

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

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

Diversification Opportunities for BJs Restaurants and Welsbach Technology

-0.02

Correlation Coefficient

BJs Restaurants  Welsbach Technology

Good diversification

The 3 months correlation between BJs and Welsbach is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Welsbach Technology Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welsbach Technology 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 Welsbach Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welsbach Technology has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Welsbach Technology go up and down completely randomly.

Pair Corralation between BJs Restaurants and Welsbach Technology

Given the investment horizon of 90 days BJs Restaurants is expected to generate 0.76 times more return on investment than Welsbach Technology. However, BJs Restaurants is 1.32 times less risky than Welsbach Technology. It trades about -0.01 of its potential returns per unit of risk. Welsbach Technology Metals is currently generating about -0.02 per unit of risk. If you would invest  3,730  in BJs Restaurants on October 26, 2024 and sell it today you would lose (143.00) from holding BJs Restaurants or give up 3.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.61%
Values	Daily Returns

BJs Restaurants  vs.  Welsbach Technology Metals

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

Welsbach Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Welsbach Technology Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Welsbach Technology is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BJs Restaurants and Welsbach Technology

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

The idea behind BJs Restaurants and Welsbach Technology Metals 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..