Correlation Between BJs Wholesale and SOCKET MOBILE

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

Diversification Opportunities for BJs Wholesale and SOCKET MOBILE

0.85

Correlation Coefficient

BJs Wholesale  SOCKET MOBILE

Very poor diversification

The 3 months correlation between BJs and SOCKET is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and SOCKET MOBILE NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOCKET MOBILE NEW 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 SOCKET MOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOCKET MOBILE NEW has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and SOCKET MOBILE go up and down completely randomly.

Pair Corralation between BJs Wholesale and SOCKET MOBILE

Assuming the 90 days horizon BJs Wholesale is expected to generate 8.15 times less return on investment than SOCKET MOBILE. But when comparing it to its historical volatility, BJs Wholesale Club is 2.32 times less risky than SOCKET MOBILE. It trades about 0.08 of its potential returns per unit of risk. SOCKET MOBILE NEW is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  125.00  in SOCKET MOBILE NEW on October 25, 2024 and sell it today you would earn a total of  26.00  from holding SOCKET MOBILE NEW or generate 20.8% return on investment over 90 days.

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

BJs Wholesale Club  vs.  SOCKET MOBILE NEW

BJs Wholesale Club

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Wholesale Club are ranked lower than 11 (%) 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.

SOCKET MOBILE NEW

Risk-Adjusted Performance

13 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SOCKET MOBILE NEW are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental drivers, SOCKET MOBILE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BJs Wholesale and SOCKET MOBILE

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

The idea behind BJs Wholesale Club and SOCKET MOBILE NEW 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.