Correlation Between BJs Restaurants and Galaxy Entertainment

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

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

Diversification Opportunities for BJs Restaurants and Galaxy Entertainment

-0.18

Correlation Coefficient

BJs Restaurants  Galaxy Entertainment

Good diversification

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

Pair Corralation between BJs Restaurants and Galaxy Entertainment

Assuming the 90 days trading horizon BJs Restaurants is expected to generate 1.25 times more return on investment than Galaxy Entertainment. However, BJs Restaurants is 1.25 times more volatile than Galaxy Entertainment Group. It trades about 0.12 of its potential returns per unit of risk. Galaxy Entertainment Group is currently generating about -0.01 per unit of risk. If you would invest  3,140  in BJs Restaurants on October 6, 2024 and sell it today you would earn a total of  380.00  from holding BJs Restaurants or generate 12.1% 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.  Galaxy Entertainment Group

BJs Restaurants

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, BJs Restaurants may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Galaxy Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Galaxy Entertainment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with BJs Restaurants and Galaxy Entertainment

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

The idea behind BJs Restaurants and Galaxy Entertainment Group 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.