Correlation Between BJs Wholesale and United Guardian
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and United Guardian 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 United Guardian 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 United Guardian, you can compare the effects of market volatilities on BJs Wholesale and United Guardian 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 United Guardian. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and United Guardian.
Diversification Opportunities for BJs Wholesale and United Guardian
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BJs and United is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and United Guardian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Guardian 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 United Guardian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Guardian has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and United Guardian go up and down completely randomly.
Pair Corralation between BJs Wholesale and United Guardian
Allowing for the 90-day total investment horizon BJs Wholesale Club is expected to generate 0.5 times more return on investment than United Guardian. However, BJs Wholesale Club is 2.0 times less risky than United Guardian. It trades about 0.05 of its potential returns per unit of risk. United Guardian is currently generating about 0.01 per unit of risk. If you would invest 7,028 in BJs Wholesale Club on August 30, 2024 and sell it today you would earn a total of 2,649 from holding BJs Wholesale Club or generate 37.69% 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. United Guardian
Performance |
| Timeline |
| BJs Wholesale Club |
| United Guardian |
BJs Wholesale and United Guardian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and United Guardian
The main advantage of trading using opposite BJs Wholesale and United Guardian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, United Guardian 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 United Guardian will offset losses from the drop in United Guardian's long position.| BJs Wholesale vs. Dollar Tree | BJs Wholesale vs. Dicks Sporting Goods | BJs Wholesale vs. Williams Sonoma | BJs Wholesale vs. Dillards |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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