Correlation Between NBCUNIVERSAL and BJs Restaurants

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

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

Diversification Opportunities for NBCUNIVERSAL and BJs Restaurants

-0.59

Correlation Coefficient

NBCUNIVERSAL  BJs Restaurants

Excellent diversification

The 3 months correlation between NBCUNIVERSAL and BJs is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding NBCUNIVERSAL MEDIA LLC and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and NBCUNIVERSAL 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 NBCUNIVERSAL MEDIA LLC 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 NBCUNIVERSAL i.e., NBCUNIVERSAL and BJs Restaurants go up and down completely randomly.

Pair Corralation between NBCUNIVERSAL and BJs Restaurants

Assuming the 90 days trading horizon NBCUNIVERSAL MEDIA LLC is expected to generate 43.04 times more return on investment than BJs Restaurants. However, NBCUNIVERSAL is 43.04 times more volatile than BJs Restaurants. It trades about 0.1 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.03 per unit of risk. If you would invest  9,132  in NBCUNIVERSAL MEDIA LLC on September 28, 2024 and sell it today you would lose (452.00) from holding NBCUNIVERSAL MEDIA LLC or give up 4.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	77.42%
Values	Daily Returns

NBCUNIVERSAL MEDIA LLC  vs.  BJs Restaurants

NBCUNIVERSAL MEDIA LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NBCUNIVERSAL MEDIA LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NBCUNIVERSAL MEDIA LLC investors.

BJs Restaurants

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, BJs Restaurants may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with NBCUNIVERSAL and BJs Restaurants

The main advantage of trading using opposite NBCUNIVERSAL and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NBCUNIVERSAL 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 NBCUNIVERSAL MEDIA LLC 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.