Correlation Between BJs Wholesale and CHS
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and CHS 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 CHS 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 CHS Inc CL, you can compare the effects of market volatilities on BJs Wholesale and CHS 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 CHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and CHS.
Diversification Opportunities for BJs Wholesale and CHS
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BJs and CHS is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and CHS Inc CL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHS Inc CL 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 CHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHS Inc CL has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and CHS go up and down completely randomly.
Pair Corralation between BJs Wholesale and CHS
Allowing for the 90-day total investment horizon BJs Wholesale Club is expected to generate 3.26 times more return on investment than CHS. However, BJs Wholesale is 3.26 times more volatile than CHS Inc CL. It trades about 0.05 of its potential returns per unit of risk. CHS Inc CL is currently generating about 0.06 per unit of risk. If you would invest 7,398 in BJs Wholesale Club on August 31, 2024 and sell it today you would earn a total of 2,279 from holding BJs Wholesale Club or generate 30.81% 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. CHS Inc CL
Performance |
| Timeline |
| BJs Wholesale Club |
| CHS Inc CL |
BJs Wholesale and CHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and CHS
The main advantage of trading using opposite BJs Wholesale and CHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, CHS 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 CHS will offset losses from the drop in CHS's long position.| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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