Correlation Between GEAR4MUSIC and BJs Wholesale
Can any of the company-specific risk be diversified away by investing in both GEAR4MUSIC 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 GEAR4MUSIC and BJs Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEAR4MUSIC LS 10 and BJs Wholesale Club, you can compare the effects of market volatilities on GEAR4MUSIC 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 GEAR4MUSIC with a short position of BJs Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEAR4MUSIC and BJs Wholesale.
Diversification Opportunities for GEAR4MUSIC and BJs Wholesale
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GEAR4MUSIC and BJs is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding GEAR4MUSIC LS 10 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 GEAR4MUSIC 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 GEAR4MUSIC LS 10 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 GEAR4MUSIC i.e., GEAR4MUSIC and BJs Wholesale go up and down completely randomly.
Pair Corralation between GEAR4MUSIC and BJs Wholesale
Assuming the 90 days horizon GEAR4MUSIC is expected to generate 10.84 times less return on investment than BJs Wholesale. But when comparing it to its historical volatility, GEAR4MUSIC LS 10 is 1.11 times less risky than BJs Wholesale. It trades about 0.03 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 Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GEAR4MUSIC LS 10 vs. BJs Wholesale Club
Performance |
| Timeline |
| GEAR4MUSIC LS 10 |
| BJs Wholesale Club |
GEAR4MUSIC and BJs Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEAR4MUSIC and BJs Wholesale
The main advantage of trading using opposite GEAR4MUSIC and BJs Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEAR4MUSIC 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.| GEAR4MUSIC vs. Virtus Investment Partners | GEAR4MUSIC vs. Shenandoah Telecommunications | GEAR4MUSIC vs. ECHO INVESTMENT ZY | GEAR4MUSIC vs. Charter Communications |
| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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