Correlation Between BJs Wholesale and Gladstone Investment
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and Gladstone Investment 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 Gladstone Investment 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 Gladstone Investment, you can compare the effects of market volatilities on BJs Wholesale and Gladstone Investment 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 Gladstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Gladstone Investment.
Diversification Opportunities for BJs Wholesale and Gladstone Investment
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BJs and Gladstone is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment 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 Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Gladstone Investment go up and down completely randomly.
Pair Corralation between BJs Wholesale and Gladstone Investment
Assuming the 90 days horizon BJs Wholesale Club is expected to generate 1.35 times more return on investment than Gladstone Investment. However, BJs Wholesale is 1.35 times more volatile than Gladstone Investment. It trades about 0.06 of its potential returns per unit of risk. Gladstone Investment is currently generating about -0.01 per unit of risk. If you would invest 7,850 in BJs Wholesale Club on August 25, 2024 and sell it today you would earn a total of 250.00 from holding BJs Wholesale Club or generate 3.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Wholesale Club vs. Gladstone Investment
Performance |
| Timeline |
| BJs Wholesale Club |
| Gladstone Investment |
BJs Wholesale and Gladstone Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and Gladstone Investment
The main advantage of trading using opposite BJs Wholesale and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, Gladstone Investment 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 Gladstone Investment will offset losses from the drop in Gladstone Investment's long position.| BJs Wholesale vs. Walmart | BJs Wholesale vs. Superior Plus Corp | BJs Wholesale vs. NMI Holdings | BJs Wholesale vs. Origin Agritech |
| Gladstone Investment vs. Lyxor 1 | Gladstone Investment vs. Xtrackers LevDAX | Gladstone Investment vs. Xtrackers ShortDAX |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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