Correlation Between BJs Wholesale and Coca Cola
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and Coca Cola 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 Coca Cola 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 Coca Cola Consolidated, you can compare the effects of market volatilities on BJs Wholesale and Coca Cola 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 Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Coca Cola.
Diversification Opportunities for BJs Wholesale and Coca Cola
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BJs and Coca is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Coca Cola Consolidated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola Consolidated 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 Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola Consolidated has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Coca Cola go up and down completely randomly.
Pair Corralation between BJs Wholesale and Coca Cola
Allowing for the 90-day total investment horizon BJs Wholesale is expected to generate 2.87 times less return on investment than Coca Cola. But when comparing it to its historical volatility, BJs Wholesale Club is 1.33 times less risky than Coca Cola. It trades about 0.05 of its potential returns per unit of risk. Coca Cola Consolidated is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 45,927 in Coca Cola Consolidated on August 27, 2024 and sell it today you would earn a total of 80,065 from holding Coca Cola Consolidated or generate 174.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Wholesale Club vs. Coca Cola Consolidated
Performance |
| Timeline |
| BJs Wholesale Club |
| Coca Cola Consolidated |
BJs Wholesale and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and Coca Cola
The main advantage of trading using opposite BJs Wholesale and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola'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 |
| Coca Cola vs. The Coca Cola | Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Keurig Dr Pepper |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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