Correlation Between BJs Wholesale and Molson Coors
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and Molson Coors 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 Molson Coors 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 Molson Coors Brewing, you can compare the effects of market volatilities on BJs Wholesale and Molson Coors 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 Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Molson Coors.
Diversification Opportunities for BJs Wholesale and Molson Coors
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BJs and Molson is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Molson Coors Brewing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Brewing 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 Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Brewing has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Molson Coors go up and down completely randomly.
Pair Corralation between BJs Wholesale and Molson Coors
Assuming the 90 days horizon BJs Wholesale Club is expected to generate 1.1 times more return on investment than Molson Coors. However, BJs Wholesale is 1.1 times more volatile than Molson Coors Brewing. It trades about 0.08 of its potential returns per unit of risk. Molson Coors Brewing is currently generating about 0.03 per unit of risk. If you would invest 6,400 in BJs Wholesale Club on August 25, 2024 and sell it today you would earn a total of 2,400 from holding BJs Wholesale Club or generate 37.5% 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. Molson Coors Brewing
Performance |
| Timeline |
| BJs Wholesale Club |
| Molson Coors Brewing |
BJs Wholesale and Molson Coors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and Molson Coors
The main advantage of trading using opposite BJs Wholesale and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, Molson Coors 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 Molson Coors will offset losses from the drop in Molson Coors' 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 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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