Correlation Between BJs Wholesale and US Foods

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

Diversification Opportunities for BJs Wholesale and US Foods

-0.12

Correlation Coefficient

BJs Wholesale  US Foods

Good diversification

The 3 months correlation between BJs and UFH is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and US Foods Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Foods Holding 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 US Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Foods Holding has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and US Foods go up and down completely randomly.

Pair Corralation between BJs Wholesale and US Foods

Assuming the 90 days horizon BJs Wholesale Club is expected to generate 1.52 times more return on investment than US Foods. However, BJs Wholesale is 1.52 times more volatile than US Foods Holding. It trades about 0.08 of its potential returns per unit of risk. US Foods Holding is currently generating about -0.08 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

BJs Wholesale Club  vs.  US Foods Holding

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.

US Foods Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days US Foods Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with BJs Wholesale and US Foods

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

The idea behind BJs Wholesale Club and US Foods Holding 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..