Correlation Between BJs Wholesale and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and Costco 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 BJs Wholesale and Costco Wholesale 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 Costco Wholesale Corp, you can compare the effects of market volatilities on BJs Wholesale and Costco 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 BJs Wholesale with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Costco Wholesale.
Diversification Opportunities for BJs Wholesale and Costco Wholesale
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BJs and Costco is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Costco Wholesale Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale Corp 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 Costco Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costco Wholesale Corp has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Costco Wholesale go up and down completely randomly.
Pair Corralation between BJs Wholesale and Costco Wholesale
Allowing for the 90-day total investment horizon BJs Wholesale Club is expected to generate 1.42 times more return on investment than Costco Wholesale. However, BJs Wholesale is 1.42 times more volatile than Costco Wholesale Corp. It trades about 0.09 of its potential returns per unit of risk. Costco Wholesale Corp is currently generating about 0.12 per unit of risk. If you would invest 7,304 in BJs Wholesale Club on August 27, 2024 and sell it today you would earn a total of 2,370 from holding BJs Wholesale Club or generate 32.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Wholesale Club vs. Costco Wholesale Corp
Performance |
| Timeline |
| BJs Wholesale Club |
| Costco Wholesale Corp |
BJs Wholesale and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and Costco Wholesale
The main advantage of trading using opposite BJs Wholesale and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, Costco 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 Costco Wholesale will offset losses from the drop in Costco Wholesale's long position.| BJs Wholesale vs. Hf Foods Group | BJs Wholesale vs. Innovative Food Hldg | BJs Wholesale vs. Calavo Growers | BJs Wholesale vs. The Chefs Warehouse |
| Costco Wholesale vs. Walmart | Costco Wholesale vs. Dollar Tree | Costco Wholesale vs. BJs Wholesale Club | Costco Wholesale vs. Target |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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