Correlation Between KAR Auction and BJs Wholesale
Can any of the company-specific risk be diversified away by investing in both KAR Auction and BJs Wholesale 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 KAR Auction and BJs Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAR Auction Services and BJs Wholesale Club, you can compare the effects of market volatilities on KAR Auction and BJs Wholesale 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 KAR Auction with a short position of BJs Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAR Auction and BJs Wholesale.
Diversification Opportunities for KAR Auction and BJs Wholesale
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KAR and BJs is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding KAR Auction Services and BJs Wholesale Club in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Wholesale Club and KAR Auction 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 KAR Auction Services are associated (or correlated) with BJs Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Wholesale Club has no effect on the direction of KAR Auction i.e., KAR Auction and BJs Wholesale go up and down completely randomly.
Pair Corralation between KAR Auction and BJs Wholesale
Considering the 90-day investment horizon KAR Auction Services is expected to generate 0.78 times more return on investment than BJs Wholesale. However, KAR Auction Services is 1.28 times less risky than BJs Wholesale. It trades about 0.16 of its potential returns per unit of risk. BJs Wholesale Club is currently generating about 0.04 per unit of risk. If you would invest 1,679 in KAR Auction Services on January 25, 2024 and sell it today you would earn a total of 71.00 from holding KAR Auction Services or generate 4.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KAR Auction Services vs. BJs Wholesale Club
Performance |
| Timeline |
| KAR Auction Services |
| BJs Wholesale Club |
KAR Auction and BJs Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAR Auction and BJs Wholesale
The main advantage of trading using opposite KAR Auction and BJs Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAR Auction position performs unexpectedly, BJs Wholesale 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 BJs Wholesale will offset losses from the drop in BJs Wholesale's long position.| KAR Auction vs. CarGurus | KAR Auction vs. Kingsway Financial Services | KAR Auction vs. Driven Brands Holdings | KAR Auction vs. Group 1 Automotive |
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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