Correlation Between BJs Wholesale and PriceSmart
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and PriceSmart 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 PriceSmart 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 PriceSmart, you can compare the effects of market volatilities on BJs Wholesale and PriceSmart 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 PriceSmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and PriceSmart.
Diversification Opportunities for BJs Wholesale and PriceSmart
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BJs and PriceSmart is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and PriceSmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PriceSmart 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 PriceSmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PriceSmart has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and PriceSmart go up and down completely randomly.
Pair Corralation between BJs Wholesale and PriceSmart
Allowing for the 90-day total investment horizon BJs Wholesale is expected to generate 1.08 times less return on investment than PriceSmart. But when comparing it to its historical volatility, BJs Wholesale Club is 1.05 times less risky than PriceSmart. It trades about 0.06 of its potential returns per unit of risk. PriceSmart is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6,071 in PriceSmart on August 31, 2024 and sell it today you would earn a total of 2,903 from holding PriceSmart or generate 47.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
BJs Wholesale Club vs. PriceSmart
Performance |
| Timeline |
| BJs Wholesale Club |
| PriceSmart |
BJs Wholesale and PriceSmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and PriceSmart
The main advantage of trading using opposite BJs Wholesale and PriceSmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, PriceSmart 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 PriceSmart will offset losses from the drop in PriceSmart's long position.| BJs Wholesale vs. Dollar Tree | BJs Wholesale vs. Dicks Sporting Goods | BJs Wholesale vs. Williams Sonoma | BJs Wholesale vs. Dillards |
| PriceSmart vs. Wal Mart de | PriceSmart vs. Pan Pacific International | PriceSmart vs. Dollarama | PriceSmart vs. Dollar General |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |