Correlation Between Assured Guaranty and BJs Restaurants

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

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

Diversification Opportunities for Assured Guaranty and BJs Restaurants

0.58

Correlation Coefficient

Assured Guaranty  BJs Restaurants

Very weak diversification

The 3 months correlation between Assured and BJs is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Assured Guaranty and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and Assured Guaranty 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 Assured Guaranty 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 Assured Guaranty i.e., Assured Guaranty and BJs Restaurants go up and down completely randomly.

Pair Corralation between Assured Guaranty and BJs Restaurants

Assuming the 90 days horizon Assured Guaranty is expected to generate 1.49 times more return on investment than BJs Restaurants. However, Assured Guaranty is 1.49 times more volatile than BJs Restaurants. It trades about -0.02 of its potential returns per unit of risk. BJs Restaurants is currently generating about -0.09 per unit of risk. If you would invest  8,318  in Assured Guaranty on December 20, 2024 and sell it today you would lose (518.00) from holding Assured Guaranty or give up 6.23% of portfolio value over 90 days.

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

Assured Guaranty  vs.  BJs Restaurants

Assured Guaranty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Assured Guaranty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Assured Guaranty is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Assured Guaranty and BJs Restaurants

The main advantage of trading using opposite Assured Guaranty and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Assured Guaranty 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 Assured Guaranty 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.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.