Correlation Between BJs Restaurants and Methode Electronics
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and Methode Electronics 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 Methode Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Methode Electronics, you can compare the effects of market volatilities on BJs Restaurants and Methode Electronics 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 Methode Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Methode Electronics.
Diversification Opportunities for BJs Restaurants and Methode Electronics
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BJs and Methode is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics 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 Methode Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methode Electronics has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Methode Electronics go up and down completely randomly.
Pair Corralation between BJs Restaurants and Methode Electronics
Given the investment horizon of 90 days BJs Restaurants is expected to generate 0.6 times more return on investment than Methode Electronics. However, BJs Restaurants is 1.65 times less risky than Methode Electronics. It trades about 0.13 of its potential returns per unit of risk. Methode Electronics is currently generating about 0.08 per unit of risk. If you would invest 3,280 in BJs Restaurants on April 20, 2025 and sell it today you would earn a total of 724.00 from holding BJs Restaurants or generate 22.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. Methode Electronics
Performance |
| Timeline |
| BJs Restaurants |
| Methode Electronics |
BJs Restaurants and Methode Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Methode Electronics
The main advantage of trading using opposite BJs Restaurants and Methode Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, Methode Electronics 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 Methode Electronics will offset losses from the drop in Methode Electronics' long position.| BJs Restaurants vs. Bloomin Brands | BJs Restaurants vs. Dine Brands Global | BJs Restaurants vs. Brinker International | BJs Restaurants vs. Red Robin Gourmet |
| Methode Electronics vs. Universal Electronics | Methode Electronics vs. Xiaomi Corp ADR | Methode Electronics vs. Viomi Technology ADR | Methode Electronics vs. Yatsen Holding |
Check out your portfolio center.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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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