Correlation Between Dillards and BJs Wholesale
Can any of the company-specific risk be diversified away by investing in both Dillards 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 Dillards and BJs Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dillards and BJs Wholesale Club, you can compare the effects of market volatilities on Dillards 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 Dillards with a short position of BJs Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dillards and BJs Wholesale.
Diversification Opportunities for Dillards and BJs Wholesale
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dillards and BJs is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Dillards 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 Dillards 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 Dillards 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 Dillards i.e., Dillards and BJs Wholesale go up and down completely randomly.
Pair Corralation between Dillards and BJs Wholesale
Considering the 90-day investment horizon Dillards is expected to generate 1.62 times more return on investment than BJs Wholesale. However, Dillards is 1.62 times more volatile than BJs Wholesale Club. It trades about 0.04 of its potential returns per unit of risk. BJs Wholesale Club is currently generating about 0.04 per unit of risk. If you would invest 35,302 in Dillards on November 2, 2024 and sell it today you would earn a total of 11,876 from holding Dillards or generate 33.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dillards vs. BJs Wholesale Club
Performance |
| Timeline |
| Dillards |
| BJs Wholesale Club |
Dillards and BJs Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dillards and BJs Wholesale
The main advantage of trading using opposite Dillards and BJs Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dillards 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.| Dillards vs. Macys Inc | Dillards vs. Kohls Corp | Dillards vs. Marks Spencer Group | Dillards vs. Marks and Spencer |
| BJs Wholesale vs. Dollar Tree | BJs Wholesale vs. Dicks Sporting Goods | BJs Wholesale vs. Williams Sonoma | BJs Wholesale vs. Dillards |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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