Correlation Between BJs Wholesale and 111

Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and 111 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 111 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 111 Inc, you can compare the effects of market volatilities on BJs Wholesale and 111 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 111. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and 111.

Diversification Opportunities for BJs Wholesale and 111

-0.61

Correlation Coefficient

BJs Wholesale  111

Excellent diversification

The 3 months correlation between BJs and 111 is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and 111 Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 111 Inc 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 111. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 111 Inc has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and 111 go up and down completely randomly.

Pair Corralation between BJs Wholesale and 111

Allowing for the 90-day total investment horizon BJs Wholesale Club is expected to generate 0.24 times more return on investment than 111. However, BJs Wholesale Club is 4.24 times less risky than 111. It trades about -0.19 of its potential returns per unit of risk. 111 Inc is currently generating about -0.25 per unit of risk. If you would invest  7,772  in BJs Wholesale Club on January 20, 2024 and sell it today you would lose (515.00) from holding BJs Wholesale Club or give up 6.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

BJs Wholesale Club  vs.  111 Inc

BJs Wholesale Club

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Wholesale Club are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent forward-looking indicators, BJs Wholesale may actually be approaching a critical reversion point that can send shares even higher in May 2024.

111 Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 111 Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with BJs Wholesale and 111

The main advantage of trading using opposite BJs Wholesale and 111 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, 111 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 111 will offset losses from the drop in 111's long position.

The idea behind BJs Wholesale Club and 111 Inc 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.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.