Correlation Between BJs Wholesale and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and Canadian Utilities 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 Canadian Utilities 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 Canadian Utilities Limited, you can compare the effects of market volatilities on BJs Wholesale and Canadian Utilities 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 Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Canadian Utilities.
Diversification Opportunities for BJs Wholesale and Canadian Utilities
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BJs and Canadian is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities 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 Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Canadian Utilities go up and down completely randomly.
Pair Corralation between BJs Wholesale and Canadian Utilities
Assuming the 90 days horizon BJs Wholesale Club is expected to generate 1.89 times more return on investment than Canadian Utilities. However, BJs Wholesale is 1.89 times more volatile than Canadian Utilities Limited. It trades about 0.26 of its potential returns per unit of risk. Canadian Utilities Limited is currently generating about 0.22 per unit of risk. If you would invest 7,950 in BJs Wholesale Club on September 4, 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. Canadian Utilities Limited
Performance |
| Timeline |
| BJs Wholesale Club |
| Canadian Utilities |
BJs Wholesale and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and Canadian Utilities
The main advantage of trading using opposite BJs Wholesale and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, Canadian Utilities 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 Canadian Utilities will offset losses from the drop in Canadian Utilities' long position.| BJs Wholesale vs. Walmart | BJs Wholesale vs. Superior Plus Corp | BJs Wholesale vs. NMI Holdings | BJs Wholesale vs. Origin Agritech |
| Canadian Utilities vs. SBA Communications Corp | Canadian Utilities vs. UET United Electronic | Canadian Utilities vs. Charter Communications | Canadian Utilities vs. METHODE ELECTRONICS |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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