Correlation Between BJs Wholesale and Caseys General

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

Diversification Opportunities for BJs Wholesale and Caseys General

0.24

Correlation Coefficient

BJs Wholesale  Caseys General

Modest diversification

The 3 months correlation between BJs and Caseys is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Caseys General Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caseys General Stores 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 Caseys General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caseys General Stores has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Caseys General go up and down completely randomly.

Pair Corralation between BJs Wholesale and Caseys General

Allowing for the 90-day total investment horizon BJs Wholesale Club is expected to generate 1.23 times more return on investment than Caseys General. However, BJs Wholesale is 1.23 times more volatile than Caseys General Stores. It trades about 0.13 of its potential returns per unit of risk. Caseys General Stores is currently generating about 0.06 per unit of risk. If you would invest  9,279  in BJs Wholesale Club on December 27, 2024 and sell it today you would earn a total of  1,770  from holding BJs Wholesale Club or generate 19.08% return on investment over 90 days.

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

BJs Wholesale Club  vs.  Caseys General Stores

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 10 (%) 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.

Caseys General Stores

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Caseys General Stores are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Caseys General may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BJs Wholesale and Caseys General

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

The idea behind BJs Wholesale Club and Caseys General Stores 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.