Correlation Between BJs Wholesale and Universal Entertainment
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and Universal Entertainment 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 Universal Entertainment 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 Universal Entertainment, you can compare the effects of market volatilities on BJs Wholesale and Universal Entertainment 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 Universal Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Universal Entertainment.
Diversification Opportunities for BJs Wholesale and Universal Entertainment
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BJs and Universal is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Universal Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Entertainment 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 Universal Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Entertainment has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Universal Entertainment go up and down completely randomly.
Pair Corralation between BJs Wholesale and Universal Entertainment
Assuming the 90 days horizon BJs Wholesale Club is expected to generate 0.51 times more return on investment than Universal Entertainment. However, BJs Wholesale Club is 1.97 times less risky than Universal Entertainment. It trades about 0.26 of its potential returns per unit of risk. Universal Entertainment is currently generating about -0.13 per unit of risk. If you would invest 7,400 in BJs Wholesale Club on August 30, 2024 and sell it today you would earn a total of 1,750 from holding BJs Wholesale Club or generate 23.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
BJs Wholesale Club vs. Universal Entertainment
Performance |
| Timeline |
| BJs Wholesale Club |
| Universal Entertainment |
BJs Wholesale and Universal Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and Universal Entertainment
The main advantage of trading using opposite BJs Wholesale and Universal Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, Universal Entertainment 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 Universal Entertainment will offset losses from the drop in Universal Entertainment's long position.| BJs Wholesale vs. Walmart | BJs Wholesale vs. Walmart | BJs Wholesale vs. Wal Mart de Mxico | BJs Wholesale vs. Dollar General |
| Universal Entertainment vs. Apple Inc | Universal Entertainment vs. Apple Inc | Universal Entertainment vs. Superior Plus Corp | Universal Entertainment vs. SIVERS SEMICONDUCTORS AB |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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