Correlation Between Carbon Revolution and BJs Restaurants

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

By analyzing existing cross correlation between Carbon Revolution Public and BJs Restaurants, you can compare the effects of market volatilities on Carbon Revolution and BJs Restaurants 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 Carbon Revolution with a short position of BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carbon Revolution and BJs Restaurants.

Diversification Opportunities for Carbon Revolution and BJs Restaurants

-0.19

Correlation Coefficient

Carbon Revolution  BJs Restaurants

Good diversification

The 3 months correlation between Carbon and BJs is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Carbon Revolution Public and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and Carbon Revolution 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 Carbon Revolution Public are associated (or correlated) with BJs Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Restaurants has no effect on the direction of Carbon Revolution i.e., Carbon Revolution and BJs Restaurants go up and down completely randomly.

Pair Corralation between Carbon Revolution and BJs Restaurants

Given the investment horizon of 90 days Carbon Revolution Public is expected to generate 15.06 times more return on investment than BJs Restaurants. However, Carbon Revolution is 15.06 times more volatile than BJs Restaurants. It trades about 0.21 of its potential returns per unit of risk. BJs Restaurants is currently generating about -0.07 per unit of risk. If you would invest  234.00  in Carbon Revolution Public on October 11, 2024 and sell it today you would earn a total of  287.00  from holding Carbon Revolution Public or generate 122.65% return on investment over 90 days.

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

Carbon Revolution Public  vs.  BJs Restaurants

Carbon Revolution Public

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Carbon Revolution Public are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, Carbon Revolution showed solid returns over the last few months and may actually be approaching a breakup point.

BJs Restaurants

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 2 (%) 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.

Pair Trading with Carbon Revolution and BJs Restaurants

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

The idea behind Carbon Revolution Public and BJs Restaurants 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.