Correlation Between Costco Wholesale and BJs Wholesale
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and BJs Wholesale 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 Costco Wholesale and BJs Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Costco Wholesale and BJs Wholesale Club, you can compare the effects of market volatilities on Costco Wholesale and BJs Wholesale 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 Costco Wholesale with a short position of BJs Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and BJs Wholesale.
Diversification Opportunities for Costco Wholesale and BJs Wholesale
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Costco and BJs is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale and BJs Wholesale Club in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Wholesale Club and Costco 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 Costco Wholesale are associated (or correlated) with BJs Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Wholesale Club has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and BJs Wholesale go up and down completely randomly.
Pair Corralation between Costco Wholesale and BJs Wholesale
Assuming the 90 days horizon Costco Wholesale is expected to generate 0.77 times more return on investment than BJs Wholesale. However, Costco Wholesale is 1.3 times less risky than BJs Wholesale. It trades about 0.15 of its potential returns per unit of risk. BJs Wholesale Club is currently generating about 0.08 per unit of risk. If you would invest 46,273 in Costco Wholesale on August 31, 2024 and sell it today you would earn a total of 45,847 from holding Costco Wholesale or generate 99.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.74% |
| Values | Daily Returns |
Costco Wholesale vs. BJs Wholesale Club
Performance |
| Timeline |
| Costco Wholesale |
| BJs Wholesale Club |
Costco Wholesale and BJs Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and BJs Wholesale
The main advantage of trading using opposite Costco Wholesale and BJs Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, BJs Wholesale 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 BJs Wholesale will offset losses from the drop in BJs Wholesale's long position.| Costco Wholesale vs. Columbia Sportswear | Costco Wholesale vs. PARKEN Sport Entertainment | Costco Wholesale vs. Taiwan Semiconductor Manufacturing | Costco Wholesale vs. BE Semiconductor Industries |
| BJs Wholesale vs. COPLAND ROAD CAPITAL | BJs Wholesale vs. Natural Health Trends | BJs Wholesale vs. EVS Broadcast Equipment | BJs Wholesale vs. EPSILON HEALTHCARE LTD |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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