Correlation Between Alibaba Group and BJs Wholesale
Can any of the company-specific risk be diversified away by investing in both Alibaba Group 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 Alibaba Group and BJs Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alibaba Group Holding and BJs Wholesale Club, you can compare the effects of market volatilities on Alibaba Group 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 Alibaba Group with a short position of BJs Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and BJs Wholesale.
Diversification Opportunities for Alibaba Group and BJs Wholesale
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alibaba and BJs is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding 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 Alibaba Group 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 Alibaba Group Holding 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 Alibaba Group i.e., Alibaba Group and BJs Wholesale go up and down completely randomly.
Pair Corralation between Alibaba Group and BJs Wholesale
Given the investment horizon of 90 days Alibaba Group Holding is expected to generate 1.03 times more return on investment than BJs Wholesale. However, Alibaba Group is 1.03 times more volatile than BJs Wholesale Club. It trades about 0.05 of its potential returns per unit of risk. BJs Wholesale Club is currently generating about 0.01 per unit of risk. If you would invest 7,146 in Alibaba Group Holding on January 25, 2024 and sell it today you would earn a total of 105.00 from holding Alibaba Group Holding or generate 1.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alibaba Group Holding vs. BJs Wholesale Club
Performance |
| Timeline |
| Alibaba Group Holding |
| BJs Wholesale Club |
Alibaba Group and BJs Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and BJs Wholesale
The main advantage of trading using opposite Alibaba Group and BJs Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group 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.| Alibaba Group vs. Appian Corp | Alibaba Group vs. Okta Inc | Alibaba Group vs. MongoDB | Alibaba Group vs. Twilio Inc |
| BJs Wholesale vs. Big Lots | BJs Wholesale vs. Aquagold International | BJs Wholesale vs. Thrivent High Yield | BJs Wholesale vs. Morningstar Unconstrained Allocation |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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