Correlation Between Armada Hflr and BJs Wholesale
Can any of the company-specific risk be diversified away by investing in both Armada Hflr and BJs Wholesale 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 Armada Hflr and BJs Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Armada Hflr Pr and BJs Wholesale Club, you can compare the effects of market volatilities on Armada Hflr and BJs Wholesale 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 Armada Hflr with a short position of BJs Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and BJs Wholesale.
Diversification Opportunities for Armada Hflr and BJs Wholesale
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Armada and BJs is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and BJs Wholesale Club in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Wholesale Club and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with BJs Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Wholesale Club has no effect on the direction of Armada Hflr i.e., Armada Hflr and BJs Wholesale go up and down completely randomly.
Pair Corralation between Armada Hflr and BJs Wholesale
Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the BJs Wholesale. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 2.86 times less risky than BJs Wholesale. The stock trades about -0.13 of its potential returns per unit of risk. The BJs Wholesale Club is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 8,681 in BJs Wholesale Club on September 18, 2024 and sell it today you would earn a total of 1,074 from holding BJs Wholesale Club or generate 12.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Armada Hflr Pr vs. BJs Wholesale Club
Performance |
| Timeline |
| Armada Hflr Pr |
| BJs Wholesale Club |
Armada Hflr and BJs Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Armada Hflr and BJs Wholesale
The main advantage of trading using opposite Armada Hflr and BJs Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr position performs unexpectedly, BJs Wholesale 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 BJs Wholesale will offset losses from the drop in BJs Wholesale's long position.The idea behind Armada Hflr Pr and BJs Wholesale Club pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| BJs Wholesale vs. Dollar Tree | BJs Wholesale vs. Dicks Sporting Goods | BJs Wholesale vs. Williams Sonoma | BJs Wholesale vs. Dillards |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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