Correlation Between BJs Wholesale and Dow Jones
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on BJs Wholesale and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Dow Jones.
Diversification Opportunities for BJs Wholesale and Dow Jones
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BJs and Dow is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Dow Jones go up and down completely randomly.
Pair Corralation between BJs Wholesale and Dow Jones
Allowing for the 90-day total investment horizon BJs Wholesale Club is expected to generate 2.16 times more return on investment than Dow Jones. However, BJs Wholesale is 2.16 times more volatile than Dow Jones Industrial. It trades about 0.29 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 per unit of risk. If you would invest 8,533 in BJs Wholesale Club on August 27, 2024 and sell it today you would earn a total of 1,141 from holding BJs Wholesale Club or generate 13.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Wholesale Club vs. Dow Jones Industrial
Performance |
| Timeline |
BJs Wholesale and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
BJs Wholesale Club
Pair trading matchups for BJs Wholesale
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with BJs Wholesale and Dow Jones
The main advantage of trading using opposite BJs Wholesale and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| BJs Wholesale vs. Innovative Food Hldg | BJs Wholesale vs. Calavo Growers | BJs Wholesale vs. The Chefs Warehouse | BJs Wholesale vs. AMCON Distributing |
| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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 Channel module to use Commodity Channel Index to analyze current equity momentum.
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