Correlation Between Bjs Wholesale and British Amer

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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

-0.6
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Bjs Wholesale and British is -0.6. 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 1.77 times more return on investment than British Amer. However, Bjs Wholesale is 1.77 times more volatile than British American Tobacco. It trades about 0.04 of its potential returns per unit of risk. British American Tobacco is currently generating about -0.08 per unit of risk. If you would invest  6,771  in Bjs Wholesale Club on July 2, 2022 and sell it today you would earn a total of  676.00  from holding Bjs Wholesale Club or generate 9.98% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Bjs Wholesale Club  vs.  British American Tobacco

 Performance (%) 
       Timeline  
Bjs Wholesale Club 
Bjs Wholesale Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bjs Wholesale Club are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting forward-looking indicators, Bjs Wholesale demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Bjs Wholesale Price Channel

British American Tobacco 
British Performance
0 of 100
Over the last 90 days British American Tobacco has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in October 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

British Price Channel

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. Amazon Inc
The idea behind Bjs Wholesale Club and British American Tobacco pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
British Amer vs. Amazon Inc
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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