Correlation Between South Jersey and BJs Restaurants

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

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

Diversification Opportunities for South Jersey and BJs Restaurants

-0.29

Correlation Coefficient

South Jersey  BJs Restaurants

Very good diversification

The 3 months correlation between South and BJs is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding South Jersey Industries and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and South Jersey 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 South Jersey Industries 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 South Jersey i.e., South Jersey and BJs Restaurants go up and down completely randomly.

Pair Corralation between South Jersey and BJs Restaurants

If you would invest  3,167  in BJs Restaurants on September 18, 2024 and sell it today you would earn a total of  421.00  from holding BJs Restaurants or generate 13.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

South Jersey Industries  vs.  BJs Restaurants

South Jersey Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days South Jersey Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, South Jersey is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

BJs Restaurants

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, BJs Restaurants demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with South Jersey and BJs Restaurants

The main advantage of trading using opposite South Jersey and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South Jersey 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 South Jersey Industries 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.