Correlation Between BJs Wholesale and Molina Healthcare
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and Molina Healthcare 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 Molina Healthcare 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 Molina Healthcare, you can compare the effects of market volatilities on BJs Wholesale and Molina Healthcare 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 Molina Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Molina Healthcare.
Diversification Opportunities for BJs Wholesale and Molina Healthcare
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BJs and Molina is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Molina Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molina Healthcare 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 Molina Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molina Healthcare has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Molina Healthcare go up and down completely randomly.
Pair Corralation between BJs Wholesale and Molina Healthcare
Allowing for the 90-day total investment horizon BJs Wholesale Club is expected to under-perform the Molina Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, BJs Wholesale Club is 1.02 times less risky than Molina Healthcare. The stock trades about -0.01 of its potential returns per unit of risk. The Molina Healthcare is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 27,928 in Molina Healthcare on January 20, 2024 and sell it today you would earn a total of 8,166 from holding Molina Healthcare or generate 29.24% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
BJs Wholesale Club vs. Molina Healthcare
Performance |
Timeline |
BJs Wholesale Club |
Molina Healthcare |
BJs Wholesale and Molina Healthcare Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BJs Wholesale and Molina Healthcare
The main advantage of trading using opposite BJs Wholesale and Molina Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, Molina Healthcare 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 Molina Healthcare will offset losses from the drop in Molina Healthcare's long position.BJs Wholesale vs. Aquagold International | BJs Wholesale vs. Morningstar Unconstrained Allocation | BJs Wholesale vs. Thrivent High Yield | BJs Wholesale vs. Via Renewables |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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