Correlation Between BJs Wholesale and Wing Yip

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

Diversification Opportunities for BJs Wholesale and Wing Yip

-0.66

Correlation Coefficient

BJs Wholesale  Wing Yip

Excellent diversification

The 3 months correlation between BJs and Wing is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Wing Yip Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wing Yip Food 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 Wing Yip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wing Yip Food has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Wing Yip go up and down completely randomly.

Pair Corralation between BJs Wholesale and Wing Yip

Allowing for the 90-day total investment horizon BJs Wholesale is expected to generate 564.64 times less return on investment than Wing Yip. But when comparing it to its historical volatility, BJs Wholesale Club is 126.86 times less risky than Wing Yip. It trades about 0.05 of its potential returns per unit of risk. Wing Yip Food is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Wing Yip Food on September 30, 2024 and sell it today you would earn a total of  570.00  from holding Wing Yip Food or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	19.05%
Values	Daily Returns

BJs Wholesale Club  vs.  Wing Yip Food

BJs Wholesale Club

Risk-Adjusted Performance

9 of 100

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

Wing Yip Food

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wing Yip Food are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Wing Yip reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BJs Wholesale and Wing Yip

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

The idea behind BJs Wholesale Club and Wing Yip Food 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.