Correlation Between BJs Wholesale and Entravision Communications
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and Entravision Communications 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 Entravision Communications 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 Entravision Communications, you can compare the effects of market volatilities on BJs Wholesale and Entravision Communications 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 Entravision Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Entravision Communications.
Diversification Opportunities for BJs Wholesale and Entravision Communications
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BJs and Entravision is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications 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 Entravision Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entravision Communications has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Entravision Communications go up and down completely randomly.
Pair Corralation between BJs Wholesale and Entravision Communications
Assuming the 90 days horizon BJs Wholesale Club is expected to generate 0.42 times more return on investment than Entravision Communications. However, BJs Wholesale Club is 2.36 times less risky than Entravision Communications. It trades about 0.06 of its potential returns per unit of risk. Entravision Communications is currently generating about 0.0 per unit of risk. If you would invest 6,350 in BJs Wholesale Club on August 26, 2024 and sell it today you would earn a total of 2,950 from holding BJs Wholesale Club or generate 46.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Wholesale Club vs. Entravision Communications
Performance |
| Timeline |
| BJs Wholesale Club |
| Entravision Communications |
BJs Wholesale and Entravision Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and Entravision Communications
The main advantage of trading using opposite BJs Wholesale and Entravision Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, Entravision Communications 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 Entravision Communications will offset losses from the drop in Entravision Communications' long position.| BJs Wholesale vs. Superior Plus Corp | BJs Wholesale vs. NMI Holdings | BJs Wholesale vs. Origin Agritech | BJs Wholesale vs. SIVERS SEMICONDUCTORS AB |
| Entravision Communications vs. NTG Nordic Transport | Entravision Communications vs. Columbia Sportswear | Entravision Communications vs. SCIENCE IN SPORT | Entravision Communications vs. GRUPO CARSO A1 |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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