Correlation Between BJs Restaurants and UTD OV

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

By analyzing existing cross correlation between BJs Restaurants and UTD OV BK LOC ADR1, you can compare the effects of market volatilities on BJs Restaurants and UTD OV 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 UTD OV. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and UTD OV.

Diversification Opportunities for BJs Restaurants and UTD OV

0.74

Correlation Coefficient

BJs Restaurants  UTD OV

Poor diversification

The 3 months correlation between BJs and UTD is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and UTD OV BK LOC ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UTD OV BK 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 UTD OV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UTD OV BK has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and UTD OV go up and down completely randomly.

Pair Corralation between BJs Restaurants and UTD OV

Assuming the 90 days trading horizon BJs Restaurants is expected to generate 3.57 times more return on investment than UTD OV. However, BJs Restaurants is 3.57 times more volatile than UTD OV BK LOC ADR1. It trades about 0.01 of its potential returns per unit of risk. UTD OV BK LOC ADR1 is currently generating about 0.0 per unit of risk. If you would invest  3,460  in BJs Restaurants on October 9, 2024 and sell it today you would earn a total of  0.00  from holding BJs Restaurants or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.12%
Values	Daily Returns

BJs Restaurants  vs.  UTD OV BK LOC ADR1

BJs Restaurants

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BJs Restaurants unveiled solid returns over the last few months and may actually be approaching a breakup point.

UTD OV BK

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UTD OV BK LOC ADR1 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, UTD OV reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BJs Restaurants and UTD OV

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

The idea behind BJs Restaurants and UTD OV BK LOC ADR1 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.