Correlation Between BJs Wholesale and African Agriculture
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and African Agriculture 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 African Agriculture 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 African Agriculture Holdings, you can compare the effects of market volatilities on BJs Wholesale and African Agriculture 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 African Agriculture. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and African Agriculture.
Diversification Opportunities for BJs Wholesale and African Agriculture
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BJs and African is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and African Agriculture Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Agriculture 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 African Agriculture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Agriculture has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and African Agriculture go up and down completely randomly.
Pair Corralation between BJs Wholesale and African Agriculture
Allowing for the 90-day total investment horizon BJs Wholesale Club is expected to generate 0.18 times more return on investment than African Agriculture. However, BJs Wholesale Club is 5.69 times less risky than African Agriculture. It trades about 0.05 of its potential returns per unit of risk. African Agriculture Holdings is currently generating about -0.1 per unit of risk. If you would invest 7,289 in BJs Wholesale Club on August 27, 2024 and sell it today you would earn a total of 2,385 from holding BJs Wholesale Club or generate 32.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.21% |
| Values | Daily Returns |
BJs Wholesale Club vs. African Agriculture Holdings
Performance |
| Timeline |
| BJs Wholesale Club |
| African Agriculture |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
BJs Wholesale and African Agriculture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and African Agriculture
The main advantage of trading using opposite BJs Wholesale and African Agriculture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, African Agriculture 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 African Agriculture will offset losses from the drop in African Agriculture's long position.| BJs Wholesale vs. Innovative Food Hldg | BJs Wholesale vs. Calavo Growers | BJs Wholesale vs. The Chefs Warehouse | BJs Wholesale vs. AMCON Distributing |
| African Agriculture vs. Juniata Valley Financial | African Agriculture vs. Olympic Steel | African Agriculture vs. IPG Photonics | African Agriculture vs. Pintec Technology Holdings |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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