Correlation Between BJs Restaurants and Northstar Clean

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

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

Diversification Opportunities for BJs Restaurants and Northstar Clean

0.48

Correlation Coefficient

BJs Restaurants  Northstar Clean

Very weak diversification

The 3 months correlation between BJs and Northstar is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Northstar Clean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northstar Clean Tech 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 Northstar Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northstar Clean Tech has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Northstar Clean go up and down completely randomly.

Pair Corralation between BJs Restaurants and Northstar Clean

Given the investment horizon of 90 days BJs Restaurants is expected to generate 1.74 times more return on investment than Northstar Clean. However, BJs Restaurants is 1.74 times more volatile than Northstar Clean Technologies. It trades about 0.2 of its potential returns per unit of risk. Northstar Clean Technologies is currently generating about -0.21 per unit of risk. If you would invest  3,099  in BJs Restaurants on July 15, 2024 and sell it today you would earn a total of  312.00  from holding BJs Restaurants or generate 10.07% 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.  Northstar Clean Technologies

BJs Restaurants

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BJs Restaurants has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, BJs Restaurants is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Northstar Clean Tech

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with BJs Restaurants and Northstar Clean

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

The idea behind BJs Restaurants and Northstar Clean Technologies 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.