Correlation Between Fast Retailing and BJs Wholesale
Can any of the company-specific risk be diversified away by investing in both Fast Retailing 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 Fast Retailing and BJs Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fast Retailing Co and BJs Wholesale Club, you can compare the effects of market volatilities on Fast Retailing 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 Fast Retailing with a short position of BJs Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and BJs Wholesale.
Diversification Opportunities for Fast Retailing and BJs Wholesale
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fast and BJs is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co 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 Fast Retailing 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 Fast Retailing Co 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 Fast Retailing i.e., Fast Retailing and BJs Wholesale go up and down completely randomly.
Pair Corralation between Fast Retailing and BJs Wholesale
Assuming the 90 days trading horizon Fast Retailing is expected to generate 2.03 times less return on investment than BJs Wholesale. But when comparing it to its historical volatility, Fast Retailing Co is 1.33 times less risky than BJs Wholesale. It trades about 0.2 of its potential returns per unit of risk. BJs Wholesale Club is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 7,700 in BJs Wholesale Club on September 1, 2024 and sell it today you would earn a total of 1,350 from holding BJs Wholesale Club or generate 17.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fast Retailing Co vs. BJs Wholesale Club
Performance |
| Timeline |
| Fast Retailing |
| BJs Wholesale Club |
Fast Retailing and BJs Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and BJs Wholesale
The main advantage of trading using opposite Fast Retailing and BJs Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing 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.| Fast Retailing vs. SIVERS SEMICONDUCTORS AB | Fast Retailing vs. Darden Restaurants | Fast Retailing vs. Reliance Steel Aluminum | Fast Retailing vs. Q2M Managementberatung AG |
| BJs Wholesale vs. Superior Plus Corp | BJs Wholesale vs. NMI Holdings | BJs Wholesale vs. Origin Agritech | BJs Wholesale vs. SIVERS SEMICONDUCTORS AB |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| 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 |