Correlation Between BJs Wholesale and Dollar Tree
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and Dollar Tree 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 Dollar Tree 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 Dollar Tree, you can compare the effects of market volatilities on BJs Wholesale and Dollar Tree 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 Dollar Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Dollar Tree.
Diversification Opportunities for BJs Wholesale and Dollar Tree
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BJs and Dollar is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Dollar Tree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar Tree 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 Dollar Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dollar Tree has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Dollar Tree go up and down completely randomly.
Pair Corralation between BJs Wholesale and Dollar Tree
Allowing for the 90-day total investment horizon BJs Wholesale Club is expected to generate 0.82 times more return on investment than Dollar Tree. However, BJs Wholesale Club is 1.23 times less risky than Dollar Tree. It trades about 0.14 of its potential returns per unit of risk. Dollar Tree is currently generating about -0.04 per unit of risk. If you would invest 6,473 in BJs Wholesale Club on January 26, 2024 and sell it today you would earn a total of 1,105 from holding BJs Wholesale Club or generate 17.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
BJs Wholesale Club vs. Dollar Tree
Performance |
Timeline |
BJs Wholesale Club |
Dollar Tree |
BJs Wholesale and Dollar Tree Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BJs Wholesale and Dollar Tree
The main advantage of trading using opposite BJs Wholesale and Dollar Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, Dollar Tree 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 Dollar Tree will offset losses from the drop in Dollar Tree's long position.BJs Wholesale vs. Ingles Markets Incorporated | BJs Wholesale vs. Natural Grocers by | BJs Wholesale vs. Tesco PLC | BJs Wholesale vs. Casino Guichard Perrachon |
Dollar Tree vs. Ingles Markets Incorporated | Dollar Tree vs. Natural Grocers by | Dollar Tree vs. Tesco PLC | Dollar Tree vs. Casino Guichard Perrachon |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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