Correlation Between BJs Wholesale and SEI INVESTMENTS
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and SEI INVESTMENTS 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 SEI INVESTMENTS 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 SEI INVESTMENTS, you can compare the effects of market volatilities on BJs Wholesale and SEI INVESTMENTS 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 SEI INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and SEI INVESTMENTS.
Diversification Opportunities for BJs Wholesale and SEI INVESTMENTS
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BJs and SEI is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and SEI INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI INVESTMENTS 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 SEI INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI INVESTMENTS has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and SEI INVESTMENTS go up and down completely randomly.
Pair Corralation between BJs Wholesale and SEI INVESTMENTS
Assuming the 90 days horizon BJs Wholesale Club is expected to generate 2.51 times more return on investment than SEI INVESTMENTS. However, BJs Wholesale is 2.51 times more volatile than SEI INVESTMENTS. It trades about 0.26 of its potential returns per unit of risk. SEI INVESTMENTS is currently generating about 0.55 per unit of risk. If you would invest 7,950 in BJs Wholesale Club on September 4, 2024 and sell it today you would earn a total of 1,100 from holding BJs Wholesale Club or generate 13.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Wholesale Club vs. SEI INVESTMENTS
Performance |
| Timeline |
| BJs Wholesale Club |
| SEI INVESTMENTS |
BJs Wholesale and SEI INVESTMENTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and SEI INVESTMENTS
The main advantage of trading using opposite BJs Wholesale and SEI INVESTMENTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, SEI INVESTMENTS 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 SEI INVESTMENTS will offset losses from the drop in SEI INVESTMENTS's long position.| BJs Wholesale vs. Walmart | BJs Wholesale vs. Superior Plus Corp | BJs Wholesale vs. NMI Holdings | BJs Wholesale vs. Origin Agritech |
| SEI INVESTMENTS vs. TOTAL GABON | SEI INVESTMENTS vs. Walgreens Boots Alliance | SEI INVESTMENTS vs. Peak Resources Limited |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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