Correlation Between BJs Restaurants and Corporate Travel

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

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

Diversification Opportunities for BJs Restaurants and Corporate Travel

0.44

Correlation Coefficient

BJs Restaurants  Corporate Travel

Very weak diversification

The 3 months correlation between BJs and Corporate is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Corporate Travel Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Travel Man and BJs Restaurants 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 BJs Restaurants are associated (or correlated) with Corporate Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Travel Man has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Corporate Travel go up and down completely randomly.

Pair Corralation between BJs Restaurants and Corporate Travel

Assuming the 90 days trading horizon BJs Restaurants is expected to generate 1.07 times more return on investment than Corporate Travel. However, BJs Restaurants is 1.07 times more volatile than Corporate Travel Management. It trades about 0.01 of its potential returns per unit of risk. Corporate Travel Management is currently generating about -0.2 per unit of risk. If you would invest  3,460  in BJs Restaurants on October 10, 2024 and sell it today you would earn a total of  0.00  from holding BJs Restaurants or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

BJs Restaurants  vs.  Corporate Travel Management

BJs Restaurants

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BJs Restaurants unveiled solid returns over the last few months and may actually be approaching a breakup point.

Corporate Travel Man

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Corporate Travel Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Corporate Travel is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BJs Restaurants and Corporate Travel

The main advantage of trading using opposite BJs Restaurants and Corporate Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Corporate Travel 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 Corporate Travel will offset losses from the drop in Corporate Travel's long position.

The idea behind BJs Restaurants and Corporate Travel Management 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.