Correlation Between BJs Wholesale and British Amer
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and British Amer 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 British Amer 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 British American Tobacco, you can compare the effects of market volatilities on BJs Wholesale and British Amer 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 British Amer. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and British Amer.
Diversification Opportunities for BJs Wholesale and British Amer
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BJs and British is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco 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 British Amer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and British Amer go up and down completely randomly.
Pair Corralation between BJs Wholesale and British Amer
Allowing for the 90-day total investment horizon BJs Wholesale Club is expected to generate 1.27 times more return on investment than British Amer. However, BJs Wholesale is 1.27 times more volatile than British American Tobacco. It trades about 0.02 of its potential returns per unit of risk. British American Tobacco is currently generating about -0.03 per unit of risk. If you would invest 7,350 in BJs Wholesale Club on December 20, 2023 and sell it today you would earn a total of 290.00 from holding BJs Wholesale Club or generate 3.95% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
BJs Wholesale Club vs. British American Tobacco
Performance |
Timeline |
BJs Wholesale Club |
British American Tobacco |
BJs Wholesale and British Amer Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BJs Wholesale and British Amer
The main advantage of trading using opposite BJs Wholesale and British Amer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, British Amer 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 British Amer will offset losses from the drop in British Amer's long position.BJs Wholesale vs. DR Horton | BJs Wholesale vs. Forsys Metals Corp | BJs Wholesale vs. Group Ten Metals | BJs Wholesale vs. Summit Materials |
British Amer vs. Kellanova | British Amer vs. Bunge Limited | British Amer vs. Lamb Weston Holdings | British Amer vs. Tootsie Roll Industries |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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