Correlation Between BJs Restaurants and Vishay Intertechnology

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

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

Diversification Opportunities for BJs Restaurants and Vishay Intertechnology

0.3

Correlation Coefficient

BJs Restaurants  Vishay Intertechnology

Weak diversification

The 3 months correlation between BJs and Vishay is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Vishay Intertechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Intertechnology 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 Vishay Intertechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vishay Intertechnology has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Vishay Intertechnology go up and down completely randomly.

Pair Corralation between BJs Restaurants and Vishay Intertechnology

Assuming the 90 days trading horizon BJs Restaurants is expected to generate 1.25 times more return on investment than Vishay Intertechnology. However, BJs Restaurants is 1.25 times more volatile than Vishay Intertechnology. It trades about 0.03 of its potential returns per unit of risk. Vishay Intertechnology is currently generating about -0.01 per unit of risk. If you would invest  2,780  in BJs Restaurants on December 2, 2024 and sell it today you would earn a total of  800.00  from holding BJs Restaurants or generate 28.78% return on investment over 90 days.

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

BJs Restaurants  vs.  Vishay Intertechnology

BJs Restaurants

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 1 (%) 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Vishay Intertechnology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vishay Intertechnology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with BJs Restaurants and Vishay Intertechnology

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

The idea behind BJs Restaurants and Vishay Intertechnology 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.