Correlation Between NYSE Composite and BJs Wholesale
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and BJs Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and BJs Wholesale Club, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of BJs Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and BJs Wholesale.
Diversification Opportunities for NYSE Composite and BJs Wholesale
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and BJs is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and BJs Wholesale go up and down completely randomly.
Pair Corralation between NYSE Composite and BJs Wholesale
Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the BJs Wholesale. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 5.07 times less risky than BJs Wholesale. The index trades about -0.11 of its potential returns per unit of risk. The BJs Wholesale Club is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 8,681 in BJs Wholesale Club on September 18, 2024 and sell it today you would earn a total of 1,074 from holding BJs Wholesale Club or generate 12.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. BJs Wholesale Club
Performance |
| Timeline |
NYSE Composite and BJs Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
BJs Wholesale Club
Pair trading matchups for BJs Wholesale
Pair Trading with NYSE Composite and BJs Wholesale
The main advantage of trading using opposite NYSE Composite and BJs Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Siriuspoint | NYSE Composite vs. Fomento Economico Mexicano | NYSE Composite vs. Boston Beer | NYSE Composite vs. Ambev SA ADR |
| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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