Correlation Between BJs Wholesale and USWE SPORTS
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and USWE SPORTS 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 USWE SPORTS 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 USWE SPORTS AB, you can compare the effects of market volatilities on BJs Wholesale and USWE SPORTS 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 USWE SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and USWE SPORTS.
Diversification Opportunities for BJs Wholesale and USWE SPORTS
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BJs and USWE is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and USWE SPORTS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USWE SPORTS AB 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 USWE SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USWE SPORTS AB has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and USWE SPORTS go up and down completely randomly.
Pair Corralation between BJs Wholesale and USWE SPORTS
Assuming the 90 days horizon BJs Wholesale Club is expected to generate 0.51 times more return on investment than USWE SPORTS. However, BJs Wholesale Club is 1.96 times less risky than USWE SPORTS. It trades about 0.07 of its potential returns per unit of risk. USWE SPORTS AB is currently generating about -0.03 per unit of risk. If you would invest 7,950 in BJs Wholesale Club on September 2, 2024 and sell it today you would earn a total of 1,100 from holding BJs Wholesale Club or generate 13.84% 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. USWE SPORTS AB
Performance |
| Timeline |
| BJs Wholesale Club |
| USWE SPORTS AB |
BJs Wholesale and USWE SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and USWE SPORTS
The main advantage of trading using opposite BJs Wholesale and USWE SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, USWE SPORTS 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 USWE SPORTS will offset losses from the drop in USWE SPORTS'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 |
| USWE SPORTS vs. Li Ning Company | USWE SPORTS vs. Trip Group Limited | USWE SPORTS vs. Superior Plus Corp | USWE SPORTS vs. NMI Holdings |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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