Correlation Between BJs Wholesale and Aon PLC
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and Aon PLC 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 Aon PLC 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 Aon PLC, you can compare the effects of market volatilities on BJs Wholesale and Aon PLC 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 Aon PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Aon PLC.
Diversification Opportunities for BJs Wholesale and Aon PLC
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BJs and Aon is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Aon PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aon PLC 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 Aon PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aon PLC has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Aon PLC go up and down completely randomly.
Pair Corralation between BJs Wholesale and Aon PLC
Assuming the 90 days horizon BJs Wholesale Club is expected to generate 1.25 times more return on investment than Aon PLC. However, BJs Wholesale is 1.25 times more volatile than Aon PLC. It trades about 0.05 of its potential returns per unit of risk. Aon PLC is currently generating about 0.03 per unit of risk. If you would invest 6,250 in BJs Wholesale Club on October 10, 2024 and sell it today you would earn a total of 2,250 from holding BJs Wholesale Club or generate 36.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
BJs Wholesale Club vs. Aon PLC
Performance |
Timeline |
BJs Wholesale Club |
Aon PLC |
BJs Wholesale and Aon PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BJs Wholesale and Aon PLC
The main advantage of trading using opposite BJs Wholesale and Aon PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, Aon PLC 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 Aon PLC will offset losses from the drop in Aon PLC's long position.BJs Wholesale vs. Global Ship Lease | BJs Wholesale vs. WisdomTree Investments | BJs Wholesale vs. ALBIS LEASING AG | BJs Wholesale vs. ECHO INVESTMENT ZY |
Aon PLC vs. American Public Education | Aon PLC vs. Laureate Education | Aon PLC vs. National Retail Properties | Aon PLC vs. BJs Wholesale Club |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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