Correlation Between BJs Wholesale and Seneca Foods

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

Diversification Opportunities for BJs Wholesale and Seneca Foods

0.67

Correlation Coefficient

BJs Wholesale  Seneca Foods

Poor diversification

The 3 months correlation between BJs and Seneca is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Seneca Foods Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seneca Foods Corp 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 Seneca Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seneca Foods Corp has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Seneca Foods go up and down completely randomly.

Pair Corralation between BJs Wholesale and Seneca Foods

Allowing for the 90-day total investment horizon BJs Wholesale Club is expected to generate 1.42 times more return on investment than Seneca Foods. However, BJs Wholesale is 1.42 times more volatile than Seneca Foods Corp. It trades about 0.13 of its potential returns per unit of risk. Seneca Foods Corp is currently generating about 0.12 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	Significant
Accuracy	100.0%
Values	Daily Returns

BJs Wholesale Club  vs.  Seneca Foods Corp

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.

Seneca Foods Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Seneca Foods Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Seneca Foods may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BJs Wholesale and Seneca Foods

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

The idea behind BJs Wholesale Club and Seneca Foods Corp 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.