Correlation Between BJs Wholesale and Richardson Electronics
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and Richardson Electronics 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 Richardson Electronics 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 Richardson Electronics, you can compare the effects of market volatilities on BJs Wholesale and Richardson Electronics 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 Richardson Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Richardson Electronics.
Diversification Opportunities for BJs Wholesale and Richardson Electronics
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BJs and Richardson is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Richardson Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richardson Electronics 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 Richardson Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richardson Electronics has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Richardson Electronics go up and down completely randomly.
Pair Corralation between BJs Wholesale and Richardson Electronics
Assuming the 90 days horizon BJs Wholesale Club is expected to generate 0.62 times more return on investment than Richardson Electronics. However, BJs Wholesale Club is 1.61 times less risky than Richardson Electronics. It trades about 0.15 of its potential returns per unit of risk. Richardson Electronics is currently generating about 0.0 per unit of risk. If you would invest 7,800 in BJs Wholesale Club on October 26, 2024 and sell it today you would earn a total of 1,400 from holding BJs Wholesale Club or generate 17.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Wholesale Club vs. Richardson Electronics
Performance |
| Timeline |
| BJs Wholesale Club |
| Richardson Electronics |
BJs Wholesale and Richardson Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and Richardson Electronics
The main advantage of trading using opposite BJs Wholesale and Richardson Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, Richardson Electronics 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 Richardson Electronics will offset losses from the drop in Richardson Electronics' long position.| BJs Wholesale vs. Walmart | BJs Wholesale vs. Walmart | BJs Wholesale vs. Costco Wholesale | BJs Wholesale vs. Target |
| Richardson Electronics vs. Hon Hai Precision | Richardson Electronics vs. Samsung SDI Co | Richardson Electronics vs. Corning Incorporated | Richardson Electronics vs. Mitsubishi Electric |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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