Correlation Between BJs Restaurants and Henderson Land

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

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

Diversification Opportunities for BJs Restaurants and Henderson Land

0.71

Correlation Coefficient

BJs Restaurants  Henderson Land

Poor diversification

The 3 months correlation between BJs and Henderson is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Henderson Land Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henderson Land Devel 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 Henderson Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henderson Land Devel has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Henderson Land go up and down completely randomly.

Pair Corralation between BJs Restaurants and Henderson Land

Assuming the 90 days trading horizon BJs Restaurants is expected to generate 1.35 times less return on investment than Henderson Land. In addition to that, BJs Restaurants is 1.08 times more volatile than Henderson Land Development. It trades about 0.12 of its total potential returns per unit of risk. Henderson Land Development is currently generating about 0.17 per unit of volatility. If you would invest  224.00  in Henderson Land Development on April 20, 2025 and sell it today you would earn a total of  62.00  from holding Henderson Land Development or generate 27.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

BJs Restaurants  vs.  Henderson Land Development

BJs Restaurants

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 9 (%) 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.

Henderson Land Devel

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Henderson Land Development are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Henderson Land reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BJs Restaurants and Henderson Land

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

The idea behind BJs Restaurants and Henderson Land Development 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.