Correlation Between WESCO International and BJs Wholesale

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

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

Diversification Opportunities for WESCO International and BJs Wholesale

-0.81

Correlation Coefficient

WESCO International  BJs Wholesale

Pay attention - limited upside

The 3 months correlation between WESCO and BJs is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding WESCO International 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 WESCO International 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 WESCO International 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 WESCO International i.e., WESCO International and BJs Wholesale go up and down completely randomly.

Pair Corralation between WESCO International and BJs Wholesale

Assuming the 90 days horizon WESCO International is expected to generate 1.11 times more return on investment than BJs Wholesale. However, WESCO International is 1.11 times more volatile than BJs Wholesale Club. It trades about 0.21 of its potential returns per unit of risk. BJs Wholesale Club is currently generating about -0.08 per unit of risk. If you would invest  13,565  in WESCO International on April 24, 2025 and sell it today you would earn a total of  4,035  from holding WESCO International or generate 29.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

WESCO International  vs.  BJs Wholesale Club

WESCO International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WESCO International are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WESCO International reported solid returns over the last few months and may actually be approaching a breakup point.

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 uncertain 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.

Pair Trading with WESCO International and BJs Wholesale

The main advantage of trading using opposite WESCO International and BJs Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESCO International 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.

The idea behind WESCO International and BJs Wholesale Club 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.