Correlation Between BJs Wholesale and Addus HomeCare
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and Addus HomeCare 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 Addus HomeCare 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 Addus HomeCare, you can compare the effects of market volatilities on BJs Wholesale and Addus HomeCare 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 Addus HomeCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Addus HomeCare.
Diversification Opportunities for BJs Wholesale and Addus HomeCare
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between BJs and Addus is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare 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 Addus HomeCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addus HomeCare has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Addus HomeCare go up and down completely randomly.
Pair Corralation between BJs Wholesale and Addus HomeCare
Assuming the 90 days horizon BJs Wholesale Club is expected to generate 0.8 times more return on investment than Addus HomeCare. However, BJs Wholesale Club is 1.25 times less risky than Addus HomeCare. It trades about 0.1 of its potential returns per unit of risk. Addus HomeCare is currently generating about 0.07 per unit of risk. If you would invest 6,000 in BJs Wholesale Club on September 2, 2024 and sell it today you would earn a total of 3,050 from holding BJs Wholesale Club or generate 50.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Wholesale Club vs. Addus HomeCare
Performance |
| Timeline |
| BJs Wholesale Club |
| Addus HomeCare |
BJs Wholesale and Addus HomeCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and Addus HomeCare
The main advantage of trading using opposite BJs Wholesale and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, Addus HomeCare 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 Addus HomeCare will offset losses from the drop in Addus HomeCare'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 |
| Addus HomeCare vs. Richter Gedeon Vegyszeti | Addus HomeCare vs. Charoen Pokphand Foods | Addus HomeCare vs. Superior Plus Corp | Addus HomeCare vs. Origin Agritech |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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