Correlation Between BJs Wholesale and EBay
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and EBay 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 Wholesale and EBay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Wholesale Club and eBay Inc, you can compare the effects of market volatilities on BJs Wholesale and EBay 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 Wholesale with a short position of EBay. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and EBay.
Diversification Opportunities for BJs Wholesale and EBay
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BJs and EBay is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and eBay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eBay Inc and BJs Wholesale 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 Wholesale Club are associated (or correlated) with EBay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eBay Inc has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and EBay go up and down completely randomly.
Pair Corralation between BJs Wholesale and EBay
Allowing for the 90-day total investment horizon BJs Wholesale Club is expected to generate 1.5 times more return on investment than EBay. However, BJs Wholesale is 1.5 times more volatile than eBay Inc. It trades about 0.04 of its potential returns per unit of risk. eBay Inc is currently generating about 0.01 per unit of risk. If you would invest 7,493 in BJs Wholesale Club on January 25, 2024 and sell it today you would earn a total of 85.50 from holding BJs Wholesale Club or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Wholesale Club vs. eBay Inc
Performance |
| Timeline |
| BJs Wholesale Club |
| eBay Inc |
BJs Wholesale and EBay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and EBay
The main advantage of trading using opposite BJs Wholesale and EBay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, EBay 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 EBay will offset losses from the drop in EBay's long position.| BJs Wholesale vs. Big Lots | BJs Wholesale vs. Dollar Tree | BJs Wholesale vs. Dicks Sporting Goods | BJs Wholesale vs. Williams Sonoma |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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