Correlation Between BJs Wholesale and ARROW ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and ARROW ELECTRONICS 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 ARROW ELECTRONICS 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 ARROW ELECTRONICS, you can compare the effects of market volatilities on BJs Wholesale and ARROW ELECTRONICS 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 ARROW ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and ARROW ELECTRONICS.
Diversification Opportunities for BJs Wholesale and ARROW ELECTRONICS
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between BJs and ARROW is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and ARROW ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARROW ELECTRONICS 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 ARROW ELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARROW ELECTRONICS has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and ARROW ELECTRONICS go up and down completely randomly.
Pair Corralation between BJs Wholesale and ARROW ELECTRONICS
Assuming the 90 days horizon BJs Wholesale Club is expected to generate 1.32 times more return on investment than ARROW ELECTRONICS. However, BJs Wholesale is 1.32 times more volatile than ARROW ELECTRONICS. It trades about 0.3 of its potential returns per unit of risk. ARROW ELECTRONICS is currently generating about 0.11 per unit of risk. If you would invest 8,650 in BJs Wholesale Club on November 5, 2024 and sell it today you would earn a total of 900.00 from holding BJs Wholesale Club or generate 10.4% 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. ARROW ELECTRONICS
Performance |
| Timeline |
| BJs Wholesale Club |
| ARROW ELECTRONICS |
BJs Wholesale and ARROW ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and ARROW ELECTRONICS
The main advantage of trading using opposite BJs Wholesale and ARROW ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, ARROW ELECTRONICS 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 ARROW ELECTRONICS will offset losses from the drop in ARROW ELECTRONICS's long position.| BJs Wholesale vs. BRIT AMER TOBACCO | BJs Wholesale vs. AEON STORES | BJs Wholesale vs. Scandinavian Tobacco Group | BJs Wholesale vs. RETAIL FOOD GROUP |
| ARROW ELECTRONICS vs. SINGAPORE AIRLINES | ARROW ELECTRONICS vs. PICKN PAY STORES | ARROW ELECTRONICS vs. Caseys General Stores | ARROW ELECTRONICS vs. Southwest Airlines Co |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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