Correlation Between NASDAQ TEST and BJs Restaurants

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

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

Diversification Opportunities for NASDAQ TEST and BJs Restaurants

-0.18

Correlation Coefficient

NASDAQ TEST  BJs Restaurants

Good diversification

The 3 months correlation between NASDAQ and BJs is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding NASDAQ TEST STOCK and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and NASDAQ TEST 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 NASDAQ TEST STOCK are associated (or correlated) with BJs Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Restaurants has no effect on the direction of NASDAQ TEST i.e., NASDAQ TEST and BJs Restaurants go up and down completely randomly.

Pair Corralation between NASDAQ TEST and BJs Restaurants

Assuming the 90 days horizon NASDAQ TEST STOCK is expected to generate 4.91 times more return on investment than BJs Restaurants. However, NASDAQ TEST is 4.91 times more volatile than BJs Restaurants. It trades about 0.01 of its potential returns per unit of risk. BJs Restaurants is currently generating about -0.05 per unit of risk. If you would invest  2,508  in NASDAQ TEST STOCK on May 7, 2025 and sell it today you would lose (645.00) from holding NASDAQ TEST STOCK or give up 25.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.25%
Values	Daily Returns

NASDAQ TEST STOCK  vs.  BJs Restaurants

NASDAQ TEST STOCK

Risk-Adjusted Performance

Very Weak

Over the last 90 days NASDAQ TEST STOCK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, NASDAQ TEST is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

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. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with NASDAQ TEST and BJs Restaurants

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

The idea behind NASDAQ TEST STOCK and BJs Restaurants 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.