Correlation Between Envela Corp and BJs Wholesale

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

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

Diversification Opportunities for Envela Corp and BJs Wholesale

0.85

Correlation Coefficient

Envela Corp  BJs Wholesale

Very poor diversification

The 3 months correlation between Envela and BJs is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Envela Corp 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 Envela Corp 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 Envela Corp 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 Envela Corp i.e., Envela Corp and BJs Wholesale go up and down completely randomly.

Pair Corralation between Envela Corp and BJs Wholesale

Assuming the 90 days trading horizon Envela Corp is expected to generate 1.85 times more return on investment than BJs Wholesale. However, Envela Corp is 1.85 times more volatile than BJs Wholesale Club. It trades about 0.08 of its potential returns per unit of risk. BJs Wholesale Club is currently generating about 0.09 per unit of risk. If you would invest  388.00  in Envela Corp on October 5, 2024 and sell it today you would earn a total of  282.00  from holding Envela Corp or generate 72.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.01%
Values	Daily Returns

Envela Corp  vs.  BJs Wholesale Club

Envela Corp

Risk-Adjusted Performance

0 of 100

Strong

Over the last 90 days Envela Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak basic indicators, Envela Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

BJs Wholesale Club

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days BJs Wholesale Club has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Envela Corp and BJs Wholesale

The main advantage of trading using opposite Envela Corp and BJs Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Envela Corp 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 Envela Corp 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.