Correlation Between BJs Wholesale and InterContinental
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and InterContinental 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 InterContinental 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 InterContinental Hotels Group, you can compare the effects of market volatilities on BJs Wholesale and InterContinental 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 InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and InterContinental.
Diversification Opportunities for BJs Wholesale and InterContinental
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BJs and InterContinental is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels 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 InterContinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InterContinental Hotels has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and InterContinental go up and down completely randomly.
Pair Corralation between BJs Wholesale and InterContinental
Assuming the 90 days horizon BJs Wholesale is expected to generate 1.74 times less return on investment than InterContinental. In addition to that, BJs Wholesale is 1.21 times more volatile than InterContinental Hotels Group. It trades about 0.05 of its total potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.1 per unit of volatility. If you would invest 6,244 in InterContinental Hotels Group on October 11, 2024 and sell it today you would earn a total of 5,556 from holding InterContinental Hotels Group or generate 88.98% 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. InterContinental Hotels Group
Performance |
Timeline |
BJs Wholesale Club |
InterContinental Hotels |
BJs Wholesale and InterContinental Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BJs Wholesale and InterContinental
The main advantage of trading using opposite BJs Wholesale and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, InterContinental 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 InterContinental will offset losses from the drop in InterContinental'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 |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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