Correlation Between STMICROELECTRONICS and BJs Wholesale
Can any of the company-specific risk be diversified away by investing in both STMICROELECTRONICS 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 STMICROELECTRONICS and BJs Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMICROELECTRONICS and BJs Wholesale Club, you can compare the effects of market volatilities on STMICROELECTRONICS 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 STMICROELECTRONICS with a short position of BJs Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMICROELECTRONICS and BJs Wholesale.
Diversification Opportunities for STMICROELECTRONICS and BJs Wholesale
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STMICROELECTRONICS and BJs is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding STMICROELECTRONICS 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 STMICROELECTRONICS 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 STMICROELECTRONICS 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 STMICROELECTRONICS i.e., STMICROELECTRONICS and BJs Wholesale go up and down completely randomly.
Pair Corralation between STMICROELECTRONICS and BJs Wholesale
Assuming the 90 days trading horizon STMICROELECTRONICS is expected to under-perform the BJs Wholesale. In addition to that, STMICROELECTRONICS is 1.42 times more volatile than BJs Wholesale Club. It trades about -0.03 of its total potential returns per unit of risk. BJs Wholesale Club is currently generating about 0.17 per unit of volatility. If you would invest 7,000 in BJs Wholesale Club on December 4, 2024 and sell it today you would earn a total of 2,650 from holding BJs Wholesale Club or generate 37.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMICROELECTRONICS vs. BJs Wholesale Club
Performance |
| Timeline |
| STMICROELECTRONICS |
| BJs Wholesale Club |
STMICROELECTRONICS and BJs Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMICROELECTRONICS and BJs Wholesale
The main advantage of trading using opposite STMICROELECTRONICS and BJs Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMICROELECTRONICS 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.| STMICROELECTRONICS vs. INTERSHOP Communications Aktiengesellschaft | STMICROELECTRONICS vs. CITY OFFICE REIT | STMICROELECTRONICS vs. COMBA TELECOM SYST | STMICROELECTRONICS vs. HUTCHISON TELECOMM |
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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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