Correlation Between Crown Castle and BJs Wholesale

Can any of the company-specific risk be diversified away by investing in both Crown Castle and BJs Wholesale 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 Crown Castle and BJs Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Crown Castle International and BJs Wholesale Club, you can compare the effects of market volatilities on Crown Castle and BJs Wholesale 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 Crown Castle with a short position of BJs Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Castle and BJs Wholesale.

Diversification Opportunities for Crown Castle and BJs Wholesale

-0.62

Correlation Coefficient

Crown Castle  BJs Wholesale

Excellent diversification

The 3 months correlation between Crown and BJs is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Crown Castle International and BJs Wholesale Club in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Wholesale Club and Crown Castle 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 Crown Castle International are associated (or correlated) with BJs Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Wholesale Club has no effect on the direction of Crown Castle i.e., Crown Castle and BJs Wholesale go up and down completely randomly.

Pair Corralation between Crown Castle and BJs Wholesale

Assuming the 90 days horizon Crown Castle International is expected to under-perform the BJs Wholesale. But the stock apears to be less risky and, when comparing its historical volatility, Crown Castle International is 1.05 times less risky than BJs Wholesale. The stock trades about -0.04 of its potential returns per unit of risk. The BJs Wholesale Club is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  6,350  in BJs Wholesale Club on October 4, 2024 and sell it today you would earn a total of  2,450  from holding BJs Wholesale Club or generate 38.58% return on investment over 90 days.

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

Crown Castle International  vs.  BJs Wholesale Club

Crown Castle Interna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Castle International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

BJs Wholesale Club

Risk-Adjusted Performance

8 of 100

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 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Crown Castle and BJs Wholesale

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

The idea behind Crown Castle International and BJs Wholesale Club 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..