Correlation Between BJs Wholesale and Estee Lauder
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and Estee Lauder 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 Estee Lauder 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 Estee Lauder Companies, you can compare the effects of market volatilities on BJs Wholesale and Estee Lauder 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 Estee Lauder. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Estee Lauder.
Diversification Opportunities for BJs Wholesale and Estee Lauder
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BJs and Estee is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Estee Lauder Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Estee Lauder Companies 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 Estee Lauder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Estee Lauder Companies has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Estee Lauder go up and down completely randomly.
Pair Corralation between BJs Wholesale and Estee Lauder
Allowing for the 90-day total investment horizon BJs Wholesale Club is expected to generate 0.61 times more return on investment than Estee Lauder. However, BJs Wholesale Club is 1.64 times less risky than Estee Lauder. It trades about 0.18 of its potential returns per unit of risk. Estee Lauder Companies is currently generating about -0.12 per unit of risk. If you would invest 9,069 in BJs Wholesale Club on January 5, 2025 and sell it today you would earn a total of 2,472 from holding BJs Wholesale Club or generate 27.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Wholesale Club vs. Estee Lauder Companies
Performance |
| Timeline |
| BJs Wholesale Club |
| Estee Lauder Companies |
BJs Wholesale and Estee Lauder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and Estee Lauder
The main advantage of trading using opposite BJs Wholesale and Estee Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, Estee Lauder 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 Estee Lauder will offset losses from the drop in Estee Lauder's long position.| BJs Wholesale vs. Dollar Tree | BJs Wholesale vs. Dicks Sporting Goods | BJs Wholesale vs. Williams Sonoma | BJs Wholesale vs. Dillards |
| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Coty Inc |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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