Correlation Between BJs Wholesale and Compagnie Plastic
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and Compagnie Plastic 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 Compagnie Plastic 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 Compagnie Plastic Omnium, you can compare the effects of market volatilities on BJs Wholesale and Compagnie Plastic 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 Compagnie Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Compagnie Plastic.
Diversification Opportunities for BJs Wholesale and Compagnie Plastic
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BJs and Compagnie is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Compagnie Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Plastic Omnium 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 Compagnie Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Plastic Omnium has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Compagnie Plastic go up and down completely randomly.
Pair Corralation between BJs Wholesale and Compagnie Plastic
Assuming the 90 days horizon BJs Wholesale Club is expected to generate 1.09 times more return on investment than Compagnie Plastic. However, BJs Wholesale is 1.09 times more volatile than Compagnie Plastic Omnium. It trades about 0.31 of its potential returns per unit of risk. Compagnie Plastic Omnium is currently generating about -0.05 per unit of risk. If you would invest 7,700 in BJs Wholesale Club on September 1, 2024 and sell it today you would earn a total of 1,350 from holding BJs Wholesale Club or generate 17.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Wholesale Club vs. Compagnie Plastic Omnium
Performance |
| Timeline |
| BJs Wholesale Club |
| Compagnie Plastic Omnium |
BJs Wholesale and Compagnie Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and Compagnie Plastic
The main advantage of trading using opposite BJs Wholesale and Compagnie Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, Compagnie Plastic 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 Compagnie Plastic will offset losses from the drop in Compagnie Plastic'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 |
| Compagnie Plastic vs. PT Astra International | Compagnie Plastic vs. Magna International | Compagnie Plastic vs. Superior Plus Corp | Compagnie Plastic vs. NMI Holdings |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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