Correlation Between BJs Wholesale and Clearside Biomedical

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

Diversification Opportunities for BJs Wholesale and Clearside Biomedical

0.14

Correlation Coefficient

BJs Wholesale  Clearside Biomedical

Average diversification

The 3 months correlation between BJs and Clearside is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Clearside Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearside Biomedical 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 Clearside Biomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearside Biomedical has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Clearside Biomedical go up and down completely randomly.

Pair Corralation between BJs Wholesale and Clearside Biomedical

Assuming the 90 days horizon BJs Wholesale Club is expected to generate 0.77 times more return on investment than Clearside Biomedical. However, BJs Wholesale Club is 1.3 times less risky than Clearside Biomedical. It trades about 0.11 of its potential returns per unit of risk. Clearside Biomedical is currently generating about 0.04 per unit of risk. If you would invest  8,800  in BJs Wholesale Club on December 29, 2024 and sell it today you would earn a total of  1,400  from holding BJs Wholesale Club or generate 15.91% return on investment over 90 days.

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

BJs Wholesale Club  vs.  Clearside Biomedical

BJs Wholesale Club

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Wholesale Club are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BJs Wholesale reported solid returns over the last few months and may actually be approaching a breakup point.

Clearside Biomedical

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Clearside Biomedical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Clearside Biomedical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BJs Wholesale and Clearside Biomedical

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

The idea behind BJs Wholesale Club and Clearside Biomedical 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.