Correlation Between BJs Wholesale and Village Super
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and Village Super 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 Village Super 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 Village Super Market, you can compare the effects of market volatilities on BJs Wholesale and Village Super 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 Village Super. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Village Super.
Diversification Opportunities for BJs Wholesale and Village Super
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BJs and Village is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Village Super Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Village Super Market 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 Village Super. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Village Super Market has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Village Super go up and down completely randomly.
Pair Corralation between BJs Wholesale and Village Super
Allowing for the 90-day total investment horizon BJs Wholesale is expected to generate 1.05 times less return on investment than Village Super. But when comparing it to its historical volatility, BJs Wholesale Club is 1.07 times less risky than Village Super. It trades about 0.06 of its potential returns per unit of risk. Village Super Market is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,190 in Village Super Market on September 16, 2024 and sell it today you would earn a total of 1,070 from holding Village Super Market or generate 48.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Wholesale Club vs. Village Super Market
Performance |
| Timeline |
| BJs Wholesale Club |
| Village Super Market |
BJs Wholesale and Village Super Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and Village Super
The main advantage of trading using opposite BJs Wholesale and Village Super positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, Village Super 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 Village Super will offset losses from the drop in Village Super's long position.| BJs Wholesale vs. Costco Wholesale Corp | BJs Wholesale vs. Dollar Tree | BJs Wholesale vs. Dollar General |
| Village Super vs. Costco Wholesale Corp | Village Super vs. BJs Wholesale Club | Village Super vs. Dollar Tree | Village Super 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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