Correlation Between BJs Wholesale and Caseys General
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and Caseys General 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 Caseys General 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 Caseys General Stores, you can compare the effects of market volatilities on BJs Wholesale and Caseys General 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 Caseys General. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Caseys General.
Diversification Opportunities for BJs Wholesale and Caseys General
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BJs and Caseys is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Caseys General Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caseys General Stores 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 Caseys General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caseys General Stores has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Caseys General go up and down completely randomly.
Pair Corralation between BJs Wholesale and Caseys General
Allowing for the 90-day total investment horizon BJs Wholesale is expected to generate 1.43 times less return on investment than Caseys General. But when comparing it to its historical volatility, BJs Wholesale Club is 1.08 times less risky than Caseys General. It trades about 0.08 of its potential returns per unit of risk. Caseys General Stores is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 23,937 in Caseys General Stores on August 27, 2024 and sell it today you would earn a total of 18,851 from holding Caseys General Stores or generate 78.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Wholesale Club vs. Caseys General Stores
Performance |
| Timeline |
| BJs Wholesale Club |
| Caseys General Stores |
BJs Wholesale and Caseys General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and Caseys General
The main advantage of trading using opposite BJs Wholesale and Caseys General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, Caseys General 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 Caseys General will offset losses from the drop in Caseys General'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 |
| Caseys General vs. Leslies | Caseys General vs. Sally Beauty Holdings | Caseys General vs. ODP Corp | Caseys General vs. 1 800 FLOWERSCOM |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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