Correlation Between BJs Restaurants and Fast Retailing

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

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

Diversification Opportunities for BJs Restaurants and Fast Retailing

0.05

Correlation Coefficient

BJs Restaurants  Fast Retailing

Significant diversification

The 3 months correlation between BJs and Fast is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing 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 Fast Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Retailing has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Fast Retailing go up and down completely randomly.

Pair Corralation between BJs Restaurants and Fast Retailing

Assuming the 90 days trading horizon BJs Restaurants is expected to generate 1.47 times more return on investment than Fast Retailing. However, BJs Restaurants is 1.47 times more volatile than Fast Retailing Co. It trades about 0.11 of its potential returns per unit of risk. Fast Retailing Co is currently generating about -0.08 per unit of risk. If you would invest  2,940  in BJs Restaurants on April 23, 2025 and sell it today you would earn a total of  500.00  from holding BJs Restaurants or generate 17.01% return on investment over 90 days.

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

BJs Restaurants  vs.  Fast Retailing Co

BJs Restaurants

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, BJs Restaurants unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fast Retailing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fast Retailing Co 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 sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with BJs Restaurants and Fast Retailing

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

The idea behind BJs Restaurants and Fast Retailing Co 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.