Correlation Between BJs Restaurants and ON THE

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

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

Diversification Opportunities for BJs Restaurants and ON THE

0.18

Correlation Coefficient

BJs Restaurants  ON THE

Average diversification

The 3 months correlation between BJs and 9BP is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and ON THE BEACH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ON THE BEACH 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 ON THE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ON THE BEACH has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and ON THE go up and down completely randomly.

Pair Corralation between BJs Restaurants and ON THE

Assuming the 90 days trading horizon BJs Restaurants is expected to under-perform the ON THE. But the stock apears to be less risky and, when comparing its historical volatility, BJs Restaurants is 1.13 times less risky than ON THE. The stock trades about -0.1 of its potential returns per unit of risk. The ON THE BEACH is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  288.00  in ON THE BEACH on December 20, 2024 and sell it today you would lose (12.00) from holding ON THE BEACH or give up 4.17% of portfolio value over 90 days.

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

BJs Restaurants  vs.  ON THE BEACH

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ON THE BEACH

Risk-Adjusted Performance

Very Weak

Over the last 90 days ON THE BEACH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ON THE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BJs Restaurants and ON THE

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

The idea behind BJs Restaurants and ON THE BEACH 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.