Correlation Between MTI WIRELESS and BJs Restaurants

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

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

Diversification Opportunities for MTI WIRELESS and BJs Restaurants

-0.5

Correlation Coefficient

MTI WIRELESS  BJs Restaurants

Very good diversification

The 3 months correlation between MTI and BJs is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding MTI WIRELESS EDGE and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and MTI WIRELESS 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 MTI WIRELESS EDGE 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 MTI WIRELESS i.e., MTI WIRELESS and BJs Restaurants go up and down completely randomly.

Pair Corralation between MTI WIRELESS and BJs Restaurants

Assuming the 90 days horizon MTI WIRELESS EDGE is expected to generate 3.7 times more return on investment than BJs Restaurants. However, MTI WIRELESS is 3.7 times more volatile than BJs Restaurants. It trades about 0.11 of its potential returns per unit of risk. BJs Restaurants is currently generating about -0.09 per unit of risk. If you would invest  47.00  in MTI WIRELESS EDGE on December 20, 2024 and sell it today you would earn a total of  18.00  from holding MTI WIRELESS EDGE or generate 38.3% return on investment over 90 days.

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

MTI WIRELESS EDGE  vs.  BJs Restaurants

MTI WIRELESS EDGE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MTI WIRELESS EDGE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, MTI WIRELESS reported solid returns over the last few months and may actually be approaching a breakup point.

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 weak 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 MTI WIRELESS and BJs Restaurants

The main advantage of trading using opposite MTI WIRELESS and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTI WIRELESS 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 MTI WIRELESS EDGE 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.