Correlation Between BJs Wholesale and Chegg

Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and Chegg 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 Chegg 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 Chegg Inc, you can compare the effects of market volatilities on BJs Wholesale and Chegg 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 Chegg. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Chegg.

Diversification Opportunities for BJs Wholesale and Chegg

-0.56

Correlation Coefficient

BJs Wholesale  Chegg

Excellent diversification

The 3 months correlation between BJs and Chegg is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Chegg Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chegg Inc 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 Chegg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chegg Inc has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Chegg go up and down completely randomly.

Pair Corralation between BJs Wholesale and Chegg

Assuming the 90 days horizon BJs Wholesale Club is expected to generate 0.39 times more return on investment than Chegg. However, BJs Wholesale Club is 2.58 times less risky than Chegg. It trades about 0.08 of its potential returns per unit of risk. Chegg Inc is currently generating about -0.23 per unit of risk. If you would invest  9,000  in BJs Wholesale Club on December 19, 2024 and sell it today you would earn a total of  900.00  from holding BJs Wholesale Club or generate 10.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

BJs Wholesale Club  vs.  Chegg Inc

BJs Wholesale Club

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Wholesale Club are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, BJs Wholesale may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Chegg Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chegg Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with BJs Wholesale and Chegg

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

The idea behind BJs Wholesale Club and Chegg Inc 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.