Correlation Between NESNVX and BJs Restaurants

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

By analyzing existing cross correlation between NESNVX 115 14 JAN 27 and BJs Restaurants, you can compare the effects of market volatilities on NESNVX 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 NESNVX with a short position of BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of NESNVX and BJs Restaurants.

Diversification Opportunities for NESNVX and BJs Restaurants

-0.03

Correlation Coefficient

NESNVX  BJs Restaurants

Good diversification

The 3 months correlation between NESNVX and BJs is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding NESNVX 115 14 JAN 27 and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and NESNVX 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 NESNVX 115 14 JAN 27 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 NESNVX i.e., NESNVX and BJs Restaurants go up and down completely randomly.

Pair Corralation between NESNVX and BJs Restaurants

Assuming the 90 days trading horizon NESNVX 115 14 JAN 27 is expected to generate 0.44 times more return on investment than BJs Restaurants. However, NESNVX 115 14 JAN 27 is 2.25 times less risky than BJs Restaurants. It trades about 0.4 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.03 per unit of risk. If you would invest  9,090  in NESNVX 115 14 JAN 27 on October 26, 2024 and sell it today you would earn a total of  288.00  from holding NESNVX 115 14 JAN 27 or generate 3.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	55.56%
Values	Daily Returns

NESNVX 115 14 JAN 27  vs.  BJs Restaurants

NESNVX 115 14

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NESNVX 115 14 JAN 27 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NESNVX is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

BJs Restaurants

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BJs Restaurants has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, BJs Restaurants is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with NESNVX and BJs Restaurants

The main advantage of trading using opposite NESNVX and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NESNVX 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 NESNVX 115 14 JAN 27 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.