Correlation Between BJs Wholesale and Etsy
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and Etsy 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 Etsy 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 Etsy Inc, you can compare the effects of market volatilities on BJs Wholesale and Etsy 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 Etsy. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Etsy.
Diversification Opportunities for BJs Wholesale and Etsy
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BJs and Etsy is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Etsy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Etsy 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 Etsy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Etsy Inc has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Etsy go up and down completely randomly.
Pair Corralation between BJs Wholesale and Etsy
Allowing for the 90-day total investment horizon BJs Wholesale Club is expected to under-perform the Etsy. But the stock apears to be less risky and, when comparing its historical volatility, BJs Wholesale Club is 1.17 times less risky than Etsy. The stock trades about -0.19 of its potential returns per unit of risk. The Etsy Inc is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 6,851 in Etsy Inc on January 20, 2024 and sell it today you would lose (117.00) from holding Etsy Inc or give up 1.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Wholesale Club vs. Etsy Inc
Performance |
| Timeline |
| BJs Wholesale Club |
| Etsy Inc |
BJs Wholesale and Etsy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and Etsy
The main advantage of trading using opposite BJs Wholesale and Etsy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, Etsy 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 Etsy will offset losses from the drop in Etsy's long position.| BJs Wholesale vs. Aquagold International | BJs Wholesale vs. Morningstar Unconstrained Allocation | BJs Wholesale vs. Thrivent High Yield | BJs Wholesale vs. Via Renewables |
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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