Correlation Between BJs Restaurants and Tyson Foods

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

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

Diversification Opportunities for BJs Restaurants and Tyson Foods

0.25

Correlation Coefficient

BJs Restaurants  Tyson Foods

Modest diversification

The 3 months correlation between BJs and Tyson is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods 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 Tyson Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tyson Foods has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Tyson Foods go up and down completely randomly.

Pair Corralation between BJs Restaurants and Tyson Foods

Assuming the 90 days trading horizon BJs Restaurants is expected to under-perform the Tyson Foods. In addition to that, BJs Restaurants is 1.22 times more volatile than Tyson Foods. It trades about -0.1 of its total potential returns per unit of risk. Tyson Foods is currently generating about 0.0 per unit of volatility. If you would invest  5,510  in Tyson Foods on December 20, 2024 and sell it today you would lose (54.00) from holding Tyson Foods or give up 0.98% of portfolio value over 90 days.

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

BJs Restaurants  vs.  Tyson Foods

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.

Tyson Foods

Risk-Adjusted Performance

Very Weak

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

Pair Trading with BJs Restaurants and Tyson Foods

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

The idea behind BJs Restaurants and Tyson Foods 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.