Correlation Between BJs Wholesale and Betterware
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and Betterware 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 Betterware 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 Betterware De Mexico, you can compare the effects of market volatilities on BJs Wholesale and Betterware 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 Betterware. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Betterware.
Diversification Opportunities for BJs Wholesale and Betterware
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BJs and Betterware is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Betterware De Mexico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betterware De Mexico 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 Betterware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betterware De Mexico has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Betterware go up and down completely randomly.
Pair Corralation between BJs Wholesale and Betterware
Allowing for the 90-day total investment horizon BJs Wholesale Club is expected to generate 0.4 times more return on investment than Betterware. However, BJs Wholesale Club is 2.52 times less risky than Betterware. It trades about 0.01 of its potential returns per unit of risk. Betterware De Mexico is currently generating about -0.16 per unit of risk. If you would invest 7,464 in BJs Wholesale Club on February 1, 2024 and sell it today you would earn a total of 4.00 from holding BJs Wholesale Club or generate 0.05% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
BJs Wholesale Club vs. Betterware De Mexico
Performance |
Timeline |
BJs Wholesale Club |
Betterware De Mexico |
BJs Wholesale and Betterware Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BJs Wholesale and Betterware
The main advantage of trading using opposite BJs Wholesale and Betterware positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, Betterware 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 Betterware will offset losses from the drop in Betterware's long position.BJs Wholesale vs. Big Lots | BJs Wholesale vs. Dollar Tree | BJs Wholesale vs. Dicks Sporting Goods | BJs Wholesale vs. Williams Sonoma |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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