Correlation Between BJs Wholesale and AECOM TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and AECOM TECHNOLOGY 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 AECOM TECHNOLOGY 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 AECOM TECHNOLOGY, you can compare the effects of market volatilities on BJs Wholesale and AECOM TECHNOLOGY 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 AECOM TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and AECOM TECHNOLOGY.
Diversification Opportunities for BJs Wholesale and AECOM TECHNOLOGY
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BJs and AECOM is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and AECOM TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECOM TECHNOLOGY 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 AECOM TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECOM TECHNOLOGY has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and AECOM TECHNOLOGY go up and down completely randomly.
Pair Corralation between BJs Wholesale and AECOM TECHNOLOGY
Assuming the 90 days horizon BJs Wholesale Club is expected to generate 1.21 times more return on investment than AECOM TECHNOLOGY. However, BJs Wholesale is 1.21 times more volatile than AECOM TECHNOLOGY. It trades about 0.08 of its potential returns per unit of risk. AECOM TECHNOLOGY is currently generating about 0.08 per unit of risk. If you would invest 5,650 in BJs Wholesale Club on September 4, 2024 and sell it today you would earn a total of 3,400 from holding BJs Wholesale Club or generate 60.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Wholesale Club vs. AECOM TECHNOLOGY
Performance |
| Timeline |
| BJs Wholesale Club |
| AECOM TECHNOLOGY |
BJs Wholesale and AECOM TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and AECOM TECHNOLOGY
The main advantage of trading using opposite BJs Wholesale and AECOM TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, AECOM TECHNOLOGY 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 AECOM TECHNOLOGY will offset losses from the drop in AECOM TECHNOLOGY's long position.| BJs Wholesale vs. Walmart | BJs Wholesale vs. Superior Plus Corp | BJs Wholesale vs. NMI Holdings | BJs Wholesale vs. Origin Agritech |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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