Correlation Between BJs Wholesale and RTL GROUP
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and RTL GROUP 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 RTL GROUP 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 RTL GROUP UNSPADR, you can compare the effects of market volatilities on BJs Wholesale and RTL GROUP 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 RTL GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and RTL GROUP.
Diversification Opportunities for BJs Wholesale and RTL GROUP
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BJs and RTL is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and RTL GROUP UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTL GROUP UNSPADR 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 RTL GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTL GROUP UNSPADR has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and RTL GROUP go up and down completely randomly.
Pair Corralation between BJs Wholesale and RTL GROUP
Assuming the 90 days horizon BJs Wholesale Club is expected to generate 0.52 times more return on investment than RTL GROUP. However, BJs Wholesale Club is 1.93 times less risky than RTL GROUP. It trades about 0.19 of its potential returns per unit of risk. RTL GROUP UNSPADR is currently generating about -0.07 per unit of risk. If you would invest 8,350 in BJs Wholesale Club on September 13, 2024 and sell it today you would earn a total of 850.00 from holding BJs Wholesale Club or generate 10.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Wholesale Club vs. RTL GROUP UNSPADR
Performance |
| Timeline |
| BJs Wholesale Club |
| RTL GROUP UNSPADR |
BJs Wholesale and RTL GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and RTL GROUP
The main advantage of trading using opposite BJs Wholesale and RTL GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, RTL GROUP 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 RTL GROUP will offset losses from the drop in RTL GROUP's long position.| BJs Wholesale vs. Walmart | BJs Wholesale vs. Costco Wholesale | BJs Wholesale vs. Dollarama | BJs Wholesale vs. Superior Plus Corp |
| RTL GROUP vs. Uber Technologies | RTL GROUP vs. Warner Music Group | RTL GROUP vs. CHEMICAL INDUSTRIES | RTL GROUP vs. PKSHA TECHNOLOGY INC |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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