Correlation Between BJs Wholesale and Sun Communities

Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and Sun Communities 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 BJs Wholesale and Sun Communities into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BJs Wholesale Club and Sun Communities, you can compare the effects of market volatilities on BJs Wholesale and Sun Communities 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 BJs Wholesale with a short position of Sun Communities. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Sun Communities.

Diversification Opportunities for BJs Wholesale and Sun Communities

-0.3

Correlation Coefficient

BJs Wholesale  Sun Communities

Very good diversification

The 3 months correlation between BJs and Sun is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Sun Communities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Communities and BJs Wholesale 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 BJs Wholesale Club are associated (or correlated) with Sun Communities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Communities has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Sun Communities go up and down completely randomly.

Pair Corralation between BJs Wholesale and Sun Communities

Assuming the 90 days horizon BJs Wholesale Club is expected to under-perform the Sun Communities. In addition to that, BJs Wholesale is 2.53 times more volatile than Sun Communities. It trades about -0.29 of its total potential returns per unit of risk. Sun Communities is currently generating about -0.14 per unit of volatility. If you would invest  10,910  in Sun Communities on April 22, 2025 and sell it today you would lose (210.00) from holding Sun Communities or give up 1.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BJs Wholesale Club  vs.  Sun Communities

BJs Wholesale Club

Risk-Adjusted Performance

Very Weak

Over the last 90 days BJs Wholesale Club has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Sun Communities

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Communities are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Sun Communities is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BJs Wholesale and Sun Communities

The main advantage of trading using opposite BJs Wholesale and Sun Communities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, Sun Communities 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 Sun Communities will offset losses from the drop in Sun Communities' long position.

The idea behind BJs Wholesale Club and Sun Communities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.