Correlation Between BJs Wholesale and Big Rock

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

Diversification Opportunities for BJs Wholesale and Big Rock

0.0

Correlation Coefficient

BJs Wholesale  Big Rock

Pay attention - limited upside

The 3 months correlation between BJs and Big is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Big Rock Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Rock Brewery 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 Big Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Rock Brewery has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Big Rock go up and down completely randomly.

Pair Corralation between BJs Wholesale and Big Rock

If you would invest  9,444  in BJs Wholesale Club on December 25, 2024 and sell it today you would earn a total of  1,575  from holding BJs Wholesale Club or generate 16.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

BJs Wholesale Club  vs.  Big Rock Brewery

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 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile forward-looking indicators, BJs Wholesale revealed solid returns over the last few months and may actually be approaching a breakup point.

Big Rock Brewery

Risk-Adjusted Performance

Very Weak

Over the last 90 days Big Rock Brewery has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Big Rock is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BJs Wholesale and Big Rock

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

The idea behind BJs Wholesale Club and Big Rock Brewery 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.