Correlation Between Ross Stores and BJs Wholesale
Can any of the company-specific risk be diversified away by investing in both Ross Stores 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 Ross Stores and BJs Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and BJs Wholesale Club, you can compare the effects of market volatilities on Ross Stores 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 Ross Stores with a short position of BJs Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and BJs Wholesale.
Diversification Opportunities for Ross Stores and BJs Wholesale
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ross and BJs is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores 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 Ross Stores 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 Ross Stores 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 Ross Stores i.e., Ross Stores and BJs Wholesale go up and down completely randomly.
Pair Corralation between Ross Stores and BJs Wholesale
Assuming the 90 days trading horizon Ross Stores is expected to generate 2.37 times less return on investment than BJs Wholesale. In addition to that, Ross Stores is 1.06 times more volatile than BJs Wholesale Club. It trades about 0.1 of its total potential returns per unit of risk. BJs Wholesale Club is currently generating about 0.26 per unit of volatility. If you would invest 7,400 in BJs Wholesale Club on August 30, 2024 and sell it today you would earn a total of 1,750 from holding BJs Wholesale Club or generate 23.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ross Stores vs. BJs Wholesale Club
Performance |
| Timeline |
| Ross Stores |
| BJs Wholesale Club |
Ross Stores and BJs Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and BJs Wholesale
The main advantage of trading using opposite Ross Stores and BJs Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores 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.| Ross Stores vs. Apple Inc | Ross Stores vs. Apple Inc | Ross Stores vs. Superior Plus Corp | Ross Stores vs. SIVERS SEMICONDUCTORS AB |
| BJs Wholesale vs. Walmart | BJs Wholesale vs. Walmart | BJs Wholesale vs. Costco Wholesale | BJs Wholesale vs. Target |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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