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 The Coca Cola, 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
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BJs and Coca is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola 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 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 Club is expected to generate 1.6 times more return on investment than Coca Cola. However, BJs Wholesale is 1.6 times more volatile than The Coca Cola. It trades about 0.29 of its potential returns per unit of risk. The Coca Cola is currently generating about 0.05 per unit of risk. If you would invest 8,935 in BJs Wholesale Club on November 1, 2024 and sell it today you would earn a total of 956.00 from holding BJs Wholesale Club or generate 10.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Wholesale Club vs. The Coca Cola
Performance |
| Timeline |
| BJs Wholesale Club |
| Coca Cola |
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. Dollar Tree | BJs Wholesale vs. Dicks Sporting Goods | BJs Wholesale vs. Williams Sonoma | BJs Wholesale vs. Dillards |
| Coca Cola vs. PepsiCo | Coca Cola vs. Vita Coco | Coca Cola vs. Aquagold International | Coca Cola vs. Thrivent High Yield |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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