Correlation Between BJs Wholesale and ECHO INVESTMENT
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and ECHO 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 ECHO 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 ECHO INVESTMENT ZY, you can compare the effects of market volatilities on BJs Wholesale and ECHO 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 ECHO INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and ECHO INVESTMENT.
Diversification Opportunities for BJs Wholesale and ECHO INVESTMENT
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BJs and ECHO is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and ECHO INVESTMENT ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECHO INVESTMENT ZY 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 ECHO INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECHO INVESTMENT ZY has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and ECHO INVESTMENT go up and down completely randomly.
Pair Corralation between BJs Wholesale and ECHO INVESTMENT
Assuming the 90 days horizon BJs Wholesale Club is expected to generate 1.39 times more return on investment than ECHO INVESTMENT. However, BJs Wholesale is 1.39 times more volatile than ECHO INVESTMENT ZY. It trades about 0.31 of its potential returns per unit of risk. ECHO INVESTMENT ZY is currently generating about -0.04 per unit of risk. 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Wholesale Club vs. ECHO INVESTMENT ZY
Performance |
| Timeline |
| BJs Wholesale Club |
| ECHO INVESTMENT ZY |
BJs Wholesale and ECHO INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and ECHO INVESTMENT
The main advantage of trading using opposite BJs Wholesale and ECHO INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, ECHO 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 ECHO INVESTMENT will offset losses from the drop in ECHO INVESTMENT's long position.| BJs Wholesale vs. Superior Plus Corp | BJs Wholesale vs. NMI Holdings | BJs Wholesale vs. Origin Agritech | BJs Wholesale vs. SIVERS SEMICONDUCTORS AB |
| ECHO INVESTMENT vs. Superior Plus Corp | ECHO INVESTMENT vs. NMI Holdings | ECHO INVESTMENT vs. Origin Agritech | ECHO INVESTMENT vs. SIVERS SEMICONDUCTORS AB |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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