Correlation Between BJs Restaurants and TROPHY GAMES

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

By analyzing existing cross correlation between BJs Restaurants and TROPHY GAMES DEV, you can compare the effects of market volatilities on BJs Restaurants and TROPHY GAMES 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 TROPHY GAMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and TROPHY GAMES.

Diversification Opportunities for BJs Restaurants and TROPHY GAMES

-0.02

Correlation Coefficient

BJs Restaurants  TROPHY GAMES

Good diversification

The 3 months correlation between BJs and TROPHY is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and TROPHY GAMES DEV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TROPHY GAMES DEV 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 TROPHY GAMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TROPHY GAMES DEV has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and TROPHY GAMES go up and down completely randomly.

Pair Corralation between BJs Restaurants and TROPHY GAMES

Assuming the 90 days trading horizon BJs Restaurants is expected to under-perform the TROPHY GAMES. But the stock apears to be less risky and, when comparing its historical volatility, BJs Restaurants is 1.39 times less risky than TROPHY GAMES. The stock trades about -0.02 of its potential returns per unit of risk. The TROPHY GAMES DEV is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  88.00  in TROPHY GAMES DEV on December 13, 2024 and sell it today you would earn a total of  8.00  from holding TROPHY GAMES DEV or generate 9.09% return on investment over 90 days.

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

BJs Restaurants  vs.  TROPHY GAMES DEV

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 comparatively stable basic indicators, BJs Restaurants is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

TROPHY GAMES DEV

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TROPHY GAMES DEV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TROPHY GAMES may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BJs Restaurants and TROPHY GAMES

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

The idea behind BJs Restaurants and TROPHY GAMES DEV 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.