Correlation Between BJs Wholesale and Talga
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and Talga 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 Talga 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 Talga Group, you can compare the effects of market volatilities on BJs Wholesale and Talga 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 Talga. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Talga.
Diversification Opportunities for BJs Wholesale and Talga
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BJs and Talga is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Talga Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talga Group 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 Talga. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talga Group has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Talga go up and down completely randomly.
Pair Corralation between BJs Wholesale and Talga
Assuming the 90 days horizon BJs Wholesale Club is expected to generate 0.47 times more return on investment than Talga. However, BJs Wholesale Club is 2.14 times less risky than Talga. It trades about 0.14 of its potential returns per unit of risk. Talga Group is currently generating about -0.04 per unit of risk. If you would invest 8,400 in BJs Wholesale Club on September 12, 2024 and sell it today you would earn a total of 600.00 from holding BJs Wholesale Club or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
BJs Wholesale Club vs. Talga Group
Performance |
| Timeline |
| BJs Wholesale Club |
| Talga Group |
BJs Wholesale and Talga Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and Talga
The main advantage of trading using opposite BJs Wholesale and Talga positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, Talga 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 Talga will offset losses from the drop in Talga's long position.| BJs Wholesale vs. Walmart | BJs Wholesale vs. Costco Wholesale | BJs Wholesale vs. Dollarama | BJs Wholesale vs. Superior Plus Corp |
| Talga vs. Japan Tobacco | Talga vs. COMMERCIAL VEHICLE | Talga vs. British American Tobacco | Talga vs. BJs Wholesale Club |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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