Correlation Between BJs Restaurants and COMPUTERSHARE

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

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

Diversification Opportunities for BJs Restaurants and COMPUTERSHARE

0.55

Correlation Coefficient

BJs Restaurants  COMPUTERSHARE

Very weak diversification

The 3 months correlation between BJs and COMPUTERSHARE is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and COMPUTERSHARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMPUTERSHARE 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 COMPUTERSHARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMPUTERSHARE has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and COMPUTERSHARE go up and down completely randomly.

Pair Corralation between BJs Restaurants and COMPUTERSHARE

Assuming the 90 days trading horizon BJs Restaurants is expected to generate 4.49 times less return on investment than COMPUTERSHARE. In addition to that, BJs Restaurants is 1.41 times more volatile than COMPUTERSHARE. It trades about 0.03 of its total potential returns per unit of risk. COMPUTERSHARE is currently generating about 0.2 per unit of volatility. If you would invest  1,620  in COMPUTERSHARE on October 24, 2024 and sell it today you would earn a total of  380.00  from holding COMPUTERSHARE or generate 23.46% return on investment over 90 days.

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

BJs Restaurants  vs.  COMPUTERSHARE

BJs Restaurants

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BJs Restaurants is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

COMPUTERSHARE

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in COMPUTERSHARE are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical indicators, COMPUTERSHARE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BJs Restaurants and COMPUTERSHARE

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

The idea behind BJs Restaurants and COMPUTERSHARE 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.