Correlation Between Gladstone Investment and BJs Wholesale
Can any of the company-specific risk be diversified away by investing in both Gladstone Investment and BJs Wholesale 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 Gladstone Investment and BJs Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gladstone Investment and BJs Wholesale Club, you can compare the effects of market volatilities on Gladstone Investment and BJs Wholesale 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 Gladstone Investment with a short position of BJs Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and BJs Wholesale.
Diversification Opportunities for Gladstone Investment and BJs Wholesale
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gladstone and BJs is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and BJs Wholesale Club in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Wholesale Club and Gladstone Investment 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 Gladstone Investment are associated (or correlated) with BJs Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Wholesale Club has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and BJs Wholesale go up and down completely randomly.
Pair Corralation between Gladstone Investment and BJs Wholesale
Assuming the 90 days horizon Gladstone Investment is expected to under-perform the BJs Wholesale. But the stock apears to be less risky and, when comparing its historical volatility, Gladstone Investment is 1.15 times less risky than BJs Wholesale. The stock trades about -0.05 of its potential returns per unit of risk. The BJs Wholesale Club is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 7,800 in BJs Wholesale Club on August 28, 2024 and sell it today you would earn a total of 1,350 from holding BJs Wholesale Club or generate 17.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gladstone Investment vs. BJs Wholesale Club
Performance |
| Timeline |
| Gladstone Investment |
| BJs Wholesale Club |
Gladstone Investment and BJs Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Investment and BJs Wholesale
The main advantage of trading using opposite Gladstone Investment and BJs Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment position performs unexpectedly, BJs Wholesale 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 BJs Wholesale will offset losses from the drop in BJs Wholesale's long position.| Gladstone Investment vs. Lyxor 1 | Gladstone Investment vs. Xtrackers LevDAX | Gladstone Investment vs. Xtrackers ShortDAX |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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